Earl Warren: Number 44, James P. Mitchell, Secretary of Labor versus Myrtle Grove Packing Company. Ms. Margolin.
Bessie Margolin: May it please the Court. The question in this case is one of the applicability of an exemption to employees engaged in picking or selling shrimps and shucking oysters as preparatory too and immediately before they are placed in cans for hermetical sealing. The question is whether these employees are completely exempt from the Act of minimum wage and overtime exemption aware that they are now subject to the minimum wage provisions of the Act and exempt only from the overtime requirement under an amendment enacted in 1949. The two Sections of the Act of the Fair Labor Standards Act which are involved are Section 13 (a) (5) and 13 (b) (4) which are printed in our brief. 13 (a) (5) was the Section in the Act that's originally enacted which granted an exemption from both minimum wage and overtime provision requirements of the Act for various phases of seafood processing and production, including propagating, processing, marketing, freezing, canning, curing, storing or distributing of seafood. In 1949, this Section was amended so that the word canning was deleted from the exempt list of processes and a new provision was enacted, 13 (b) (4), providing simply an overtime exemption -- exemption from the overtime requirements only for any employee employed in the canning of any kind of fish. At the same time, 13 (a) (5) was further amended by inserting as to the word processing to make it absolutely clear that canning was being deleted, the parenthetical phrase other than canning. The question here is whether the employee to a --
William O. Douglas: (Voice Overlap) go overtime than minimum pages of section.
Bessie Margolin: The new Section 1949 is only an overtime exemption.
William O. Douglas: The process?
Bessie Margolin: For canning.
William O. Douglas: Canning.
Bessie Margolin: Canning.
William O. Douglas: The processing.
Bessie Margolin: Processing other than canning is still exempt from both minimum wage --
William O. Douglas: Or both.
Bessie Margolin: -- and overtime.
William O. Douglas: Any exempt only from the overtime.
Bessie Margolin: From the overtime requirement. The question is --
Earl Warren: And the question here is -- the question here is whether the shucking of the oysters and the picking of the shrimps is processing or canning.
Bessie Margolin: Whether it's processing other than canning or other than canning.
Earl Warren: Yes.
Bessie Margolin: The question comes up because the Fifth and the Fourth Circuits were in direct conflict on that question. This case comes up from the Fifth Circuit and the Fifth Circuit adopted respondent's contention that the selling and picking of shrimp and shucking of oysters, although admittedly in this case for all practical purpose was exclusively purposes of canning and was an integrated step immediately preceding and closely and continuously integrated profound in the same building with the other phases, other operations of the canning, although in a separate room from the canning room or the packing room in the same building and immediately preceding the whole process from the time the oysters are dumped on the table and that the shrimps for picking -- shucking. The whole process from that time through the hermetical sealing consumes just about a -- from one hour to two hours time. It's followed immediately.
Stanley Reed: What -- what would be processing other than canning?
Bessie Margolin: Well, now, that was the position that the Fifth Circuit -- apparently, the reasoning of the Fifth Circuit was that if this wasn't processing other than canning, it didn't know what was processing other than canning that that term would be meaningless. As the Fourth Circuit said in its decision, there are enumerable scour to situation, which would fit the term processing other than canning even apart from the preparatory operations of two can. One that the -- that -- we mentioned several examples in our brief. Justice Reed, we mentioned the menhaden, the rendering of oil and production of meal from the menhaden which is a big industry in this country. And as a matter of fact, that is one of the specific examples that was mentioned in the very brief legislative debate in the House on the amendment. They were very brief and didn't have too much bearing on the panel enactment. But at first, it was proposed to take both processing and canning out of the 13 (a) (5), the complete exemption and the debate simply indicate that someone objected to taking processing out because of this menhaden situation, mentioning specifically the menhaden situation, so that the -- as it came out of the Conference Committee, it did still contain the work processing with the parenthetical phrase other than canning.
Speaker: Well, (Inaudible) circuit decisions, as I understand it (Inaudible)
Bessie Margolin: Just the ones that -- that dropped and --
Speaker: Dropped.
Bessie Margolin: -- probably they say that if those -- in the packing room, I think, I don't know most of the employees at the canary, all this shell has been shucked. Here, there were 150 to 200 of them. I don't know what the total employment here was but our best advice was that it wasn't much over 200, so most of the employees at the canary are -- are actually the pickers and shuckers. There are, of course, some employees in the packing room that the record doesn't show just how many.Unpublished statistics show that in the oyster and canning -- in the oyster and shrimp canning industry, in the plants from 75 to 90 -- 90% of the employees are those that do the peeling and shucking. Therefore, the exemption so far as oysters and shrimp is concerned, the -- the extension of the minimum wage provision to -- to canning would have very little meaning if they didn't cover also the, perhaps, pickers and -- and shuckers.
Harold Burton: But those shuckers are also (Inaudible) for, what shall I say, non-canning sales.
Bessie Margolin: Well, that -- that was the --
Harold Burton: Does the -- does the record show what proportion of shellfish or market phase?
Bessie Margolin: Well, in this -- in this case, the record shows that 97., I think, 6 percent was for canning.
Harold Burton: What are they're canning?
Bessie Margolin: Shrimp and oysters.
Harold Burton: And oysters.
Bessie Margolin: And that --
Harold Burton: And the industry as a whole, we don't know.
Bessie Margolin: The industry as a whole -- the --
Harold Burton: Somewhat that they are not canned I think.
Bessie Margolin: Some of it is not canned. Now, in the original Fifth Circuit case which where the opinion of the Fifth Circuit was actually written and the testimony was stipulated by agreement, that was in the nature that was friendly suit. It was stipulated that substantial parts of it were not canned, that some of it was fresh frozen -- fresh packaged are frozen and sold. And the Fifth Circuit there did emphasize the fact that the reselling and the shucking might not necessarily -- was not necessarily for canning that they didn't know whether it was going to be frozen or canned. However, in this case, where it was admitted and conceded that virtually all of the -- that the practical purposes is all canning and Mr. (Inaudible) who's their partner in one of the firms and a direct -- a vice president of the other testified that at both plants now they are doing only canning that the frozen -- the fresh -- the frozen meat is -- is something that's only done sporadically if they have a -- a little surplus or if they don't have enough meat for canning. They sometimes -- as I say in this case, it came through, I think eighth-tenth of 1% that was frozen. The rest is -- was sold. It was oysters sold in the sacks so there was no processing of that at all. So eight -- I think it was eighth-tenth of 1% in this case was for other purposes in canning.
Stanley Reed: The -- the oyster is sold in stacks did you say?
Bessie Margolin: In sacks, I think. Occasionally, if they don't get enough for canning, they'll sell a sack without any profit. I'd like to point out here too that even under the Fifth Circuit's apparent reasoning and counsel for respondent also are obvious. Apparently, the argument is that it has to be exclusively for purposes of canning and that it can't be for anything else. If the operation could possibly be for something other than canning if not intended to be part of canning. Now, that must be the argument because it's submitted that -- here that for all practical purposes, nothing but canning was done at this plant. That -- that argument, I might point out, doesn't hold for the oysters here because the oysters are steamed before they are shucked and they're steamed only if they are to be canned. So, when the oysters are shucked here, they're -- they are being shucked solely and exclusively for purposes of canning because, the -- the steaming process, which precedes it, puts them in that position. So that reasoning could not possibly apply to the oysters here as to the -- assuming that -- that it could apply to the shrimp, I think, the Fourth Circuit decision is obviously the correct construction of -- of the statute that it's conclusively supported by the legislative history, the reports of the conferee, both of the Senate and the House specifically stated that it was intended to include the preparatory -- the necessary preparatory operation and the subsequent operation such as labeling. We quote on page 14 of their brief, the Government's brief, the pertinent portions from the reports and I simply call attention to the italicized sentence of that quotation, which states specifically that canning in addition to meaning hermetically sealing and sterilizing and I'm quoting, “Also means other operations profound in connection therewith such as necessary preparatory operation profound on the products before they are placed in bottles, cans or other containers to be hermetically sealed as well as the actual placing of the commodity in such containers.” Now, we believe that -- that the legislative intent couldn't be any -- any clearer and if there's very little room for further argument, I might just conclude by saying that certainly the Fourth Circuit's construction is -- is much more in accord with the established principles for construing this statute and that is that the coverage provisions to be broadly construed and the exemption provisions now be construed. And the Fifth Circuit, it seems to us they are exactly the opposite of that whereas the Fourth Circuit applied those principles.
Earl Warren: Mr. Hughes.
Mark F. Hughes: May it please the Court. Now, I am interested in the rather, I might say, if it's not prohibited here, unfair statement of facts made by the attorney representative of the Labor Department. They have pursued that same course in this matter since the inception of this lawsuit about five or six years ago. The oyster and shrimp industry in the south who cares, now among its workers, probably the freest labor of both colors, white and black, the least segregated and the fairest treated of any in the United States was a very small business. It's not only a small business. It's not as big as the menhaden business where they go out and pick the fish from the sea and turn them into fertilizer and meal. It's a smaller business because there is a limit of what it can do. That is the limit of number of shrimp in the sea and the water -- the oysters that we can produce by propagation. However, it is a peculiar business because it's found nowhere else in the world just like it is from North Carolina to Mexico. Nowhere in the world do you find people, there are people who are catching oysters and eat them. There are people who catch a shrimp and eat them, but nowhere in the world do you find a small industry, and this is small, while I'll represent the Myrtle Grove Canning Company. As a matter of fact, I'm speaking for the entire industry and the entire industry is not so much interested in itself. It's interested in this class of people who over a hundred years has helped it, worked for it, been a part of it, in fact, produced the man who now operate the industry. I don't presume that the limit in North Carolina, the guy was in Texas that they had two funds that have assets exceeding half a million dollars. And yet, among the people who came from those men who went down to the sea in both of the foreign dominions have come aside of an independent race of people down there, who for over 80 or 90 years have been making a living in this oyster and shrimp industry. Now, when this law was passed, the industry was even as far as its labor was of concerned, not only integrated but it will unionize, two strong local unions, one of the man who is active and went out to sea to catch the fish that they brought into the factories, the other, the old man, white, black, green and yellow, young and old, who would were the shuckers and the shrimp pickers were unionized. From 1932, as the record will show here, until the time this case first came before a federal court, these people through their own efforts not universally because there's a great difference in the class of pay among the same people, but these people on the average through their own efforts had raised their pay a thousand percent. And while this Act is trying to cover all of the shrimp pickers and the oyster openers and I want to say this, I have a great pride in my profession because my great grandfather was a member of it.But these people are just as distinct and have attributes of their own as lawyers. That is their vocation -- avocation in life. They know nothing else. If you stop them tomorrow, they would either go on the pitiful, penurious, old-age pension that we have in our State and in some of the other states, and I may say this that im not reflecting upon our State, it's because of the poverty of the State. They can do -- they are doing the best they can or they would get this door that the ordinary man, $35 or $40 that's called social security. Now, the independent people, there are people that have bread in the life of the independents and they breath to see in the time of their birth that not only brings in the men ideas of adventure, one of which created this Court as well as this nation, but that are always in the little ways different from other people. Now, certainly, when a man goes out there and spends his life at the sea, he doesn't get rich. His family doesn't get rich. He gets old quicker than you are. He's 68 years. They are on him, heavier than my 68 years. And when he comes to a time that he can no longer know what was safety to the man with him, he won't sway of making a living around the place that he live with a man he associated with and in this shrimp picking and oyster shucking organization, he has a part. So, when this law came into effect, the Mavar and their cases called Donnely versus Mavar referred to as the Donnely case. It was decided by the Fifth Circuit by my friend and one of the greatest gentlemen we have on the bench today, Judge Holmes in our case. Some few number of the union wanted this page, probably, the ones that could make the 75 cents because some of them made 50, a few -- a few more made 60 and 70 and 75, but more made $80, $1.5 and $2 varying on their youth, their skill and the time that they could give to their work. So, some of them began to grumble and we filed the declaratory judgment case to the District Court of the United States to the Southern District of Mississippi. We invited the Labor Department to contest it. They didn't contest it and even as the young lady on the other side is talking about a hearing that she didn't attend but which I was in close contact with, I'm going to say that if the trial of this case which I conducted for the attorney of the Department of Justice were setting within the bar and was invited by Judge Myers, one of the finest judges we have in the lower federal judiciary to come in and take a part. We won that case. It was, I will say a friendly case. They were not enemies. They didn't have shotguns out but they had the aimless lawyers they could get in that part of Mississippi. And that was appeared before this Court and the man who at that time was a President of the Bar Association, the Mississippi representative. And when Judge Myers decided in our favor and we went over to the Circuit Court of Appeals, then they did come into court. They come in to a court with a brief, not only arguing the law, but attacking to express some of our State Bar Association and myself for the handling of this lawsuit, although, they had to change from the very beginning. They were invited. I sent a copy of the bill of complaint to the Department myself at Birmingham. Now, Judge Holmes, in what I think is a great opinion, a sort of a homely opinion, a philosophic opinion, an opinion where he gets down to earth and considers men and people and not holding the wisdom of taking everybody and make them in a little move and sending them down a certain path, decided that the sole reason of that was processing, was to cover everything except canning. Now, when this case got up here, when they selected a core firm there, it could get us a sort of or a kind of situation in Mexico of shrimp and kind of situate in New Mexico ship row and went in this business temporarily, but almost wholly with canning. When they brought that record up here, they brought just a narrower record here, just enough to show interstate commerce, which we had to admit and then oysters were canned and so forth and I may see in the trial of the case one of the men who broke his words and we own some evidence that we took. So, when we presented it to the Court, we want to show you what these processes other than canning are and what the processes of canning. We have Appendix 4 to our brief on page 114. The number of the page is being quite in the Court because it's largely devoted to that which the Court can consider or not. Then, we have Appendix 50123 and the Court will see there and that was the evidence before the Court in the Southern District of Mississippi on which Judge Holmes, whose opinion I'm now trying to uphold wrote his find and wonderful opinion and that was the evidence before him and this suit is not a suit to enjoin the Myrtle Grove Canning Company. It's a suit against the entire shrimp and oyster industry of the south and the southwest and an attempt to overturn. The opinion of the Fifth Circuit had to go and to -- pardon me to use the word, to -- to adopt the opinion of the Fourth Circuit, a very wonderful opinion, a logical opinion, an opinion, which satisfies the Department of Labor. Now, the sole argument, the really basic argument and the only argument that really amounts to anything in the brief of the petitioner is this that the courts should follow and give strong consideration as I think it does when they're right to the administrative finding what it says, and the Fourth Circuit did that, should be the law. But when it's rejected, as the Fifth Circuit, rejected it in the face of the language of the law, in the face of the facts before it, in the face of the meaning of English language, then it's bad law and the bad law of a circuit ought to be set aside so that the good luck of this changing Labor Department should prevail. I want the Court -- call to the Court how ridiculous that would be. Since this case, since this case has been on the docket, there's been three different titles, Coleman, Durkin and Mitchell. Every two or three years, we have somebody according to the contention of the Labor Department of the -- of the petitioner. Somebody that can say, “This is the law and that's a law.” And destroy the lives and the hopes of 8 or 10 or 15 to 20 decent -- a thousand decent Americans who want to live as one of them said in their testimony here, although that I can find it right away, allow me just a second. This is the Secretary of the Labor Union who said this, “We would like to work like we did in the past which has been the method of our grandfathers and grandmothers. In piecework, you earn what you can.” A scale of works set by the association and then brought to a meeting with the packers. We would like to wake like we did in the past and then another one, the President of the union, a woman I know myself who find a woman who has ever lived in America who has brought her people from -- you might say five cents or 10 cents, a certain portion for oysters up to a $1, a race of 1000 percent in less than 20 years said that not only she but many, many others of the old people. Thank God that every night that they had the right to go down there and work to the extent of their ability to work. They work -- some of them for two hours, some for six hours, some for four hours. They stay away for an hour. They come back when they please and do what they please. The only real control we have over them is that they must while they -- they pick shrimp and shuck oysters. Now, the decision of this Court means just this and I think I have just as much right to argue the economic problem to the Court if it affects the welfare of people as a social problem. The decision of the Court in this case, which I say would be contrary to the expressed contention of the legislature if it accepted the idea and theory of the petitioner, would be to destroy the way of living and the way of working of people who have no other way and no other place to work. Now, the case, which she's talking about, is referred to in the brief as the Blue Channel case, the law of crab and oyster placed down in South Georgia. They won it but they didn't win anything for the pickers because in my idea, that the way I get it in the record, is a form of letter to have a man in the package business for the Blue Channel Corporation showing that they have protected an oyster picker as then when the case is tried to had a shrimp picker. So, with this -- if this view of the Fourth Circuit is taken as far as the four miserable people who do the work is concerned that the Labor Department is supposed to look after it will be appearing victory. They would have won an illusionary 75 cents an hour, something that they'll never get because as this lady says, “They'll be denied the right to work as their grandmothers and grandfathers who would like to work.” But to show you, may it please Court, and I'm right, she says the only thing about processes is the Manhattan people, that great destroyer of aquatic life that really should be forbidden. It's wrong. This is out of a craze. I think my -- one of my associates is engaged in it, I'm not. That isn't true. In the record of this case, we refer to it on page 4 of the brief. I think it's record -- at page 26. The Labor Department, the petitioner here agreed that the principal part of the defendant's operation was in the purchase, handling, processing, canning and sale and distribution of oysters and shrimps. That as -- answers the justices' question. There is processing. There is a process before canning. You could take the great Frenchman, who in the Napoleonic Wars, discovered canning and see what he claimed for it. He just claimed by hermetically seal in the can, you could preserve food. And most of the dictionaries for 50 are -- are more years carried that definition. They broadened it a little bit, put in (Inaudible), cleaning it, preparing it. Now, if you look at our books there, you'll see these many, many things. These oysters come in to this canning room filthy and dirty, full of dirt and grit. If you'd eat it, it could kill you.Some of them are bad and some of them are good. They're inspected, washed, cleaned, salt is added, weighed, put in cans and run down the line and canned and after canning, actually sealing, they are cooked again, plus sterilized so that they'll keep it. Now, there isn't a single case above the level of this new channel case at all. In any wise at all, it's helpful to the Court in this case. So therefore, even though the Court says they're going to give a whole lot of -- of thought to the administrative ruling, it's got to go back on the English language. What did the Congress mean? They're intelligent people, I think. I think they've done a great work for this country, since they were first organized by the Constitution of the United States. And I think it will continue that great work. I'm unafraid of them because they are answer to the people and I think the people ordinarily rewrite it. They knew that they were saying, “They went ahead and started where you began to grow oysters.” And they came to the wharf where you unloaded them. And then, they said processing other than canning. Now, they want you. I haven't got time enough in my argument here today to go into all of it. The respondent, the Labor Department, want you to ignore that comma but use it and destroy the meaning of processing and say that processing is not exempt for why is it in anywise affected by canning. Now, they talk about time. Hiroshima was destroyed in about a half of a second. That might be the failure to work. You can touch a button a day and it will ring a bell in London. So, in a little bit, if they'll little both talk about two or three or four hours destroying the meaning of the word, destroying the right of labor of the people to make the inference form to a condition that the men who were legislating knew nothing about because they, Mr. Chief Justice, are so generous. Mr. Justice Douglas is a great traveler but nowhere in world did I think -- do I think that he found except in the south that they were canning oysters and shrimp to eat it.
Earl Warren: We'll recess now.


Warren E. Burger: We will hear arguments next in 71-1016, Federal Power Commission v. Louisiana Lights and Powers, and 71-1040, United Gas Pipe Line against Louisiana Light and Power, consolidated cases. Mr. Gooch, you may proceed whenever you are ready.
Gordon Gooch: Mr. Chief Justice, may it please the court. This case presents two basic issues, the first is the issue of whether the Federal Power Commission has jurisdiction to protect the interstate consumers of natural gas transported in interstate commerce, regardless of whether the ultimate customer of that gas is a customer, the distribution company or a direct purchaser from the pipeline. The second issue is whether or not --
Potter Stewart: State that first one again.
Gordon Gooch: Yes, sir, whether the Federal Power Commission has jurisdiction under Section 1 (b) of the Natural Gas Act, and sections 4, 5 and 16 to regulate the curtailments of service of gas transported in interstate commerce by interstate pipelines, regardless of whether the customer is a customer of a distribution company, or a direct purchaser from the pipeline. The second issue is whether the Fifth Circuit properly found that the Federal Power Commission did not have jurisdiction over certain facilities when the Federal Power Commission subsequently has found that they did have jurisdiction over those facilities due to the injection of substantial quantities of interstate gas. The case arose when Louisiana Power and Light filed suit in the District Court in Louisiana seeking to enjoin United Gas Pipe Line, from implementing any curtailment program which would result in the reduction of gas delivered to two of their generating plants. At the time, the suit was instituted, two separate proceedings were pending before the Federal Power Commission. The first proceeding, a curtailment proceeding was to determine the Federal Power Commission's jurisdiction to allocate the suppliers of Interstate Natural Gas pipelines. When their gas supplies were so depleted that they were unable to meet the contracts of all of their consumers in all states served by the pipeline, directly or indirectly. And a second proceeding was pending to determine the jurisdictional status of certain facilities that are part of the United Gas Pipe Line system, that and part of the time in the past had been operated in intrastate commerce with a separate system of supply, but subsequently quantities of interstate gas had been injected into the former intrastate system. And the question presented was whether or not those facilities, therefore were subject to federal and not state jurisdiction. The Louisiana Power and Light company obtained a temporary restraining order ordering United to make their full deliveries without curtailment. On LP&L's claim that domestic customers did not need the gas, that was ordered curtailed. In time sequence now, and I'll skip some procedural matters, in time sequence, the Federal Power Commission then held in the curtailment proceeding that under section 1 (b) of the Natural Gas Act, Sections 4 and 5 the decisions of this Court in the Transco case and Panhandle in 332 U.S, that the Federal Power Commission had plenary jurisdiction under its transportation authority, over gas dedicated to interstate commerce and being transported in interstate commerce, and had the power to curtail, any and all customers of a pipeline in order to be sure that a fair allocation of gas supplies would be available to all interstate consumers. Next, in time sequence, the Fifth Circuit held that the Federal Power Commission had no jurisdiction to order curtailments of deliveries of gas dedicated to interstate commerce, transported in interstate commerce but delivered to direct industrial consumers as distinguished from deliveries to distribution companies for ultimate resale to public, citizens, and industries. Subsequently --
Byron R. White: It held that the Commission had the power neither under 1 (b) 4 and 5, nor under Section 7 or 8.
Gordon Gooch: Sir, it appeared to me that the Fifth Circuit held that under Section 7 (b) the Commission could have an abandonment proceedings and order the direct industrials completely out of an interstate pipeline. The Fifth Circuit said between the initial certification under Section 7 --
Byron R. White: Oh yes, but they held that they cannot have a curtailment proceeding?
Gordon Gooch: That's correct, sir.
Byron R. White: Under section 7.
Gordon Gooch: No, sir they didn't really approach that, they only said that to the extent that the Federal Power Commission has any jurisdiction, it's under Section 7, and that would be limited to the initial certification or the abandonment, but nothing in between.
Byron R. White: Yes.
Gordon Gooch: And the curtailment proceedings are handled under Section 4 and 5 and 16, not under Section 7.
Byron R. White: Well, I know but wasn't one of the claims before the Fifth Circuit that there could be a curtailment sort of abandonment under Section 7?
Gordon Gooch: Yes, sir.
Byron R. White: And they rejected that?
Gordon Gooch: I can't say that, sir. I think that they would permit an abandonment proceeding, that would have a result of reducing permanently the services to a direct industrial customer. I don't think there is any question of Fifth Circuit that curtailments could be handled, that is to say abandonments of service could be handled under Section 7, that wasn't an issue. The issue was whether or not it could be handled under Sections 4, 5, and 16. The Fifth Circuit went on to hold that the Federal Power Commission could not exercise jurisdiction over the former intrastate facilities because in the Fifth Circuit's view the quantities of gas injected in to that system were de minimis, and there was a possibility that another affiliate of the pipeline could have put the same quantities of gas into the system that were interstate gas. In the Federal Power Commission's opinion subsequently issued, the Commission found that the gas being injected into the system was substantial. In fact made 67% of the peak day deliveries for the New Orleans' system, and found that the affiliate of the United Gas Pipe Line did not have sufficient quantities or deliverability basis to make up the difference and that the interstate gas was needed in order to maintain the peak day viability of the formally intrastate system. Now both Commission decisions, both deciding its authority under curtailments, and also deciding its authority over the Green System as it's called are now pending before the Fifth Circuit for decision. The Commission through the Solicitor General requested certiorari because if the Fifth Circuit's decision is correct, and the Federal Power Commission has no jurisdiction over gas transported in interstate commerce, except as an initial certifying matter or except at the conclusion of an abandonment proceedings after the individual customer is being compelled to abandon. Then the Federal Power Commission is powerless to prevent the interstate consumers of Natural Gas, the domestic consumers, the homes, the schools, or hospitals from being certain that they have a chance for their fair share of a scarce gas supply when the pipelines are unable to meet all other contracts. Now LP&L has put a question that the Louisiana Commission is better able to determine the public interest of Louisiana citizens for the use of gas supply than the Federal Power Commission, and they argued that the elected officials of the state of Louisiana would be more likely to protect the interest of Louisiana citizens than with the Federal Power Commission, we don't argue that point. Our point is that it is our responsibility as we read the Natural Gas Act and the decisions of this Court under it. It is our responsibility to protect the gas supply of all consumers in all states served by the interstate pipeline, and in this case, gas from United gets us far away as Boston, because they resale the Texas gas, Texas Eastern, Transco, Southern Natural, and that gas then is transported not only in interstate commerce by United but by other pipelines throughout the Eastern portion of the United States. And if the Federal Power Commission has no authority to curtail or divert the volumes that are dedicated to industrial consumers in the state of production or in any other state, then the Commission has no authority either to prohibit undue preferences or discriminations under Section 4, which is a clear ground of authority to the Commission, nor any action under Section 5 or 16 of the Gas Act. Now section 1 (b) of the Natural Gas Act from which our authority derives states clearly that we have three alternate, basis independent responsibility jurisdiction. The first is jurisdiction over transportation of gas in interstate commerce. The second is over sales for resale of gas in interstate commerce. And the third is over the Natural Gas companies themselves. And this court in the East Ohio case in 338 US and in the Panhandle case 332 US has clearly set out those as independent grounds of the Federal Power Commission's jurisdiction. And in two cases, the Panhandle 332 and in Transco 365, this Court has specifically recognized that when curtailments are necessary, that curtailments and interruption of service are matter that relates to transportation and therefore within the jurisdiction of the Federal Power Commission to control, and allocating the competing demands among the several states.
Potter Stewart: Transco was an initial certification proceeding?
Gordon Gooch: Yes sir. In the Transco case, in recognition, the court recognized the types of authority that the Federal Power Commission had -- both the Panhandle case and and the Transco were not curtailment cases, that is to say where the issue is presented, but in both of those cases, the Court recognized that in a matter of allocating gas supply among the several states, that it was the type of authority that was granted to this Commission and --
Byron R. White: Would United have to get to consent of the Federal Power Commission to curtail transportation to LP&L?
Gordon Gooch: Yes sir.
Byron R. White: Under what section?
Gordon Gooch: -- they would have to -- assuming the contract [Voice Overlap]
Byron R. White: Let's assume there was no contract --
Gordon Gooch: No contract at all.
Byron R. White: They have just been selling gas to LP&L over a long period of time, and they suddenly decided they want to sell it all to, to transport it farther East.
Gordon Gooch: No sir, they could do not do that.
Byron R. White: Will they have to get consent?
Gordon Gooch: Yes sir.
Byron R. White: Under what section?
Gordon Gooch: The Federal Power Commission has ordered all pipelines that are unable to meet all their contracts, direct or indirect filed under Section 4.
Byron R. White: I know they have ordered but that's sort of assuming the answer to this case, isn't it?
Gordon Gooch: Well sir, it seems to me that the Federal Power Commission has three choices. The Federal Power Commission may proceed under Section 4 and 5 as one choice. The Federal Power Commission may proceed under Section 7 and order abandonment if it so chooses.
Byron R. White: Or forbid it?
Gordon Gooch: Or forbid it, well it's not necessary -- yes sir, that's correct. And the third is under Section 16 or otherwise as we had a rule making, 405 which considered the possibility of adopting regulations nationwide that would handle this problem so that it wouldn't run the risk of householders having --
Byron R. White: Would United have to get consent from the Federal Power Commission if it cut down its deliveries to its domestic, to the utilities for the resale?
Gordon Gooch: Yes sir.
Byron R. White: So one way or another, if they can't satisfy both direct users then the utility customers are going to have to --
Gordon Gooch: Somebody is going to be curtailed.
Byron R. White: Somebody is going to have to go to the Commission?
Gordon Gooch: Yes sir.
Byron R. White: One way or the other?
Gordon Gooch: Yes sir, but the Fifth Circuit has held that the direct customers do not come to the Commission, they are free to sue for their full contract quantities in Court and then it's up to the Court to determine who had to allocate the gas and decide who gets the gas.
Byron R. White: Well, there are some contract provisions on the contract sale under which United could curtail without coming in the Commission?
Gordon Gooch: Well sir, the problem with that is there are some 300 and some odd contracts on United system that all the contract provisions are not the same. And the extent to which you relied on contract rather than regulation to decide who gets interrupted. You then have two problems, one a court assuming a State Court is handling and has the jurisdiction to affect gas in other states, that is to say divert it from an interstate stream to serve a local need. He has got to determine if it has a domestic preference in it. He is got to determine what all the domestic needs on the entire interstate system is, before he can do it and that's what the Commission does. The court would have to do it too. Secondly, in this very case on LP&L's sworn allegation, the District Court entered a temporary restraining order, saying that the domestic customers did not need the gas and therefore LP&L could not be interrupted. So we run the risk of multiple litigation on contract by contract basis, with no one unless every distribution company and every customer participates.
Byron R. White: So a court could decide that United had to satisfy deliveries to LP&L and the Commission could refuse to give United the permission to cut down its gas deliveries to the utility resale.
Gordon Gooch: That's a possibility sir. Basically what the Commission is doing --
Byron R. White: Exactly the same circumstances.
Gordon Gooch: I think so, I am not sure I understood your question but --
Byron R. White: Well, I mean to Commission and the courts could decide it differently?
Gordon Gooch: Oh yes sir, no question about that. And the other proposition is the Federal Power Commission is claiming the right to overwrite the contracts, no matter what they say. So that a rational system of interstate priorities can be setup, so that the interstate customers will not have their gas diverted at the basis of a state regulatory commission, or state, or other court and instead there will be an interstate, regulation of an interstate gas trade.
Harry A. Blackmun: May I ask Mr. Gooch, this gets back back to a question Mr. Justice White asked you earlier. You said that you did not think that the issue, the Section 7 issue, jurisdictional issue had been decided by the Fifth Circuit?
Gordon Gooch: No sir, I don't mean to say that -- I don't think there is any question in the Fifth Circuit's decision that the Commission could proceed by way of abandonment and knock a direct industry or any other customer of an interstate pipeline, I don't think --
Harry A. Blackmun: What does this mean in 17A? The issue is does the FPC have the authority to modify condition or certificate issued for facilities used to make a direct sale, or briefly stated does the Commission have continuing certificate jurisdiction. FPC asserts that it does and that it needs to have this jurisdiction to make effective what it conceives to be the full extent of its regulatory powers, we deny this assertion.
Gordon Gooch: We didn't claim that sir, we weren't claiming that we had a modification of the certificate, what we were saying was that under Section 4 and 5 of the Natural Gas Act, that says that the Commission has certain powers among of which is to prevent discrimination against any person, that we have the power to overwrite the contracts that were behind those certificates.
Harry A. Blackmun: Are you saying then that to do what you are doing in this case, you could not operate under Section 7?
Gordon Gooch: No sir, we could not because until the end of a lengthy proceeding, I don't know who would determine where the interstate gas supply would go, that would depend on who got to the courthouse first, or who was closer to the interstate source and --
Harry A. Blackmun: If that have to be done on an individual by point company basis?
Gordon Gooch: Yes sir.
Harry A. Blackmun: And individual contract basis?
Gordon Gooch: Not only individual contract but --
Harry A. Blackmun: But each individual pipelines?
Gordon Gooch: Yes sir, it does because the Federal Power Commission has no jurisdiction whatsoever to order interstate pipelines to exchange gas among themselves. Nor can we order gas from the intrastate market into the interstate market, nor can we order a producer to sell gas to the intrastate market. May I have the remaining time for Mr. Harvin please?
Warren E. Burger: Very well Mr. Gooch. Mr. Harvin.
William C. Harvin: Mr. Chief Justice, may it please the court. While the question before the court is a limited one of the curtailment jurisdiction of the Federal Power Commission, the commission has graciously conceded five minutes of this presentation to United, its co-petitioner here to speak to a few of the practical aspects of this problem that we hope the Court will keep in its mind as it decides the question of FPC curtailment jurisdiction or not. United is an interstate gas transmission system covering the states of Texas, Louisiana, Mississippi, Alabama, and Florida, and supplying some five other jurisdictional pipelines which in turn supply much of the gas, that's eventually consumed in the mid-west and in the east. In addition to people such as Louisiana Power and Light and in addition to those other jurisdictional pipeline customers, we serve over 200 other direct industrial customers including some 14 different power plants such as Louisiana Power and Light. We serve over 100 distribution companies that in turn supply gas to some 800 different communities. And of extreme significance is the fact that some 37% of our volume is taken up in these direct industrial sales and this makes the decision of the Court of Appeals, excluding direct industrial sales from the curtailment jurisdiction of the Federal Power Commission, extremely important not only to United but to United's other customers as well, or it's undisputed that the total gas requirements of all of United's customers just cannot be met irrespective of what this court decides about whether the FPC has curtailment jurisdiction or not. The electrical utilities and the other direct industrial customers all assert different theories about why they should have priority to get their full requirements, and they do so without regard to the impact or effect that these positions they are taking may have on the distribution companies and the domestic consumers along the length and the breadth or our system. Well, if these conflicting interests are to be resolved in terms of a system wide shortage without effective regulation, the priorities will have to be based on such factors as who has the physical capacity by virtue of his geographical location close to the source of supply of United's gas, or who is able to get to the courthouse first and then join United's reduction of deliveries. Gas beyond curtailed levels that's obtained by such means is simply going to be taken away from others of United's customers. So we get right down to the question of who is going to determine the priorities to an interstate pipelines limited supplies of gas among a variety of customers in many, many states. Well, reducing deliveries to industrial customers as maybe necessary to meet human needs or requirements, is basically a matter of interrupting service, not abandoning contracts. And it calls for interruption of services all along the interstate pipeline system. And this Court had announced on two occasions that interrupting service was a matter largely related to the transportation jurisdiction of the Federal Power Commission. Thus within its jurisdiction, that was the procedure United followed to implement and seek FPC approval of a curtailment program. A curtailment which had its impact on industrial sales. It has thus far had no impact and foreseeably and hopefully will have no impact on domestic consumers. The same is true with respect to the gas that's supplied to the power plants. Their deliveries are reduced to the extent that they use gas for the generation of electricity for industrial consumption, but their human needs requirements are supplied without any reduction whatsoever. Under FPC jurisdiction, we believe that this program of orderly reduction of deliveries can be handled in the public interest. It can be handled uniformly, whether exceptional circumstances that apply to one customer, they can be viewed in light of the interests of all the customers. State regulatory agencies for practical and legal purposes are not equipped to handle such problems of an interstate pipeline system and to allow it to be conducted by random litigation and conflicting Court decisions based upon different facts relating to different special interests in different states has put us in a complete state of chaos in the gas industry. This is not to suggest that need creates federal power and the curtailment jurisdiction in the Federal Power Commission. It is to suggest that since Congress specifically wanted to avoid any regulatory gap and since the job cannot be done at the local and the state level, that the logical place for it to be done is within the parameters of the Natural Gas Act by the Federal Power Commission.
Warren E. Burger: Thank you Mr. Harvin. Mr. Carter.
Andrew P. Carter: Mr. Chief Justice, may it please the Court. LP&L's affirmative position in this case is that its contracts with United or direct sales contract, direct industrial sales contracts exempt under Section 1 (b) of the Act. The Fifth Circuit has so held, that's the decision here on for review. Now the FPC in order to scrape that holding is arguing that it has a plenary jurisdiction under what it terms its transportation authority, and it points to the first part of Section 1 (b) to say that that's where its transportation authority resides. Now, our brief we believe adequately talked about the direct sale aspects and we believe the Fifth Circuit opinion adequately speaks to that subject and we're going to spend our time today in rebutting that the position that the FPC takes about this plenary transportation authority. I think that while there is a lot of chaff in this case, we can get to the essence very quickly by my saying that in order to determine the jurisdiction here, all we have to look at is three key factors. And I'm not going to say as Mr. Plotkin said earlier that this is a simple issue. But I believe that if we look at the three factors it will simplify the case for the Court. Those three factors are, first of all, the congressional history. And in this case I don't believe I can emphasize too strongly, the effect of that congressional history on this whole matter. The second thing is the decisions of this Court, and I'm speaking now of the Panhandle Indiana case, 337 and the Transco case in 365 US. And the third is the actions of the FPC itself. Now, addressing myself to the congressional history first and I'll dwell on it a little bit because as I said it is so important to this whole matter. We did a rather comprehensive study of that legislative history and it became more interesting all along, because we found that the history here was taking place during 1936, 1937 and 1938, which I believe we all will agree were the high watermarks of the Roosevelt administration in terms of the passage of regulatory legislation. And an example of that I would say is the National Labor Relations Act, which is I think the Court knows so well has an exclusive or peremptory nature to it. And I think all of that legislation at that time was of the same type with the sole exception of this Natural Gas Act. That's an interesting thing about this congressional history is that Congress and apparently it was getting a lot of heat, I would say, from the National Association of Railroad and Utilities Commission as the representatives of the state authorities. And speaking for the states, they made a strong case for the proposition of dual regulation here. And as a result, you had -- running like a thread through the congressional history, the proposition that we would have dual regulation and we were going to leave to the states, those things that the states had already been regulating and that Congress felt they could reach and the courts felt they could reach. Now Section 1 (b) reflects that history because Section 1 (b) really is a two part sort of statute. In the first part of the statute, it tells what matters will fall into the ambit of FPC jurisdiction, and then it has a 'But' Clause in it, a conservatory proviso which reserves to the states those things that are to be for state regulation. And it is in that conservatory proviso that we find the saving grace to opposition here because it was there that Congress reflected in the statute that congressional history that I just described. The second aspect that I find in the congressional history that so pertinent here is that Congress indicated plainly and unqualifiedly that it knew of the Court decisions and the reach of the states under those Court decisions, and specifically mentioned the Pennsylvania Gas Company case during the congressional debate. I think that without dwelling on any long quotes from the congressional history, I do have a sample that's only one shot couple of sentences. That sums the whole matter up here. In House Report for 709, of the 75th Congress which is, I would say is the foundation report, in all of this congressional history and the court will find that this court has many times discussed that House Report and cited it in its decisions. In that House Report 709, it is said that states have of course for many years regulated sales of Natural gas to consumers in intrastate transactions. The states have also been able to regulate sales to consumers even though such sales are in interstate commerce. Such sales being considered local in character and in the absence of congressional prohibition subject to state regulation, and they cite the Pennsylvania Gas Company case and then they say there is no intention in enacting the present legislation to disturb the states in the exercise of such jurisdiction. Now, Your Honors, it seems to me plain from that congressional history, that the FPC's claim to a plenary transportation jurisdiction, just is completely contradicted by that history. Because the Congress knew that these direct industrial sales were being made through interstate facilities, which is what the FPC says gives them this plenary authority. And yet they exempted in Section 1 (b), all of those sales even though they were through interstate facilities. So, I think the first key furnishes us a rather adequate pick for the FPC coffin.
William H. Rehnquist: Mr. Carter.
Andrew P. Carter: Yes, Your Honor.
William H. Rehnquist: Turning to 1(b) is there a specific exclusion there, that you are relying on.
Andrew P. Carter: Yes, Mr. Justice Rehnquist, we are relying on the exclusion that comes about from the conservatory proviso that commences with but shall not apply to any other transportation or sale of natural gas. Now, we say that that language when compared with the language of the remainder of that section means to reflect the congressional history, that I just talked about of exempting all direct industrial sales even those made through interstate facilities. That's what that language has been held, I mean this isn't my interpretation. Now, let's go to the second factor I said was a key here. Let's talk about for a moment the decisions of this Court. I am speaking now again of Panhandle Indiana and Transco. The Panhandle Indiana case involved an effort by a pipeline to make a direct sale in Indiana. The Indiana commission sought to regulate both the rate of that sale and the service terms. By the way, you will find in the briefs, although it didn't come out in this oral argument today that (Inaudible) company and I think the Fifth Circuit does too with the FPC when they tried to talk about separating out rate by equating it with sale. I think it's perfectly understandable from the whole, you might say the conjures of jurisprudence on this whole subject that a sale includes not only rate but other terms. And their knowledgeable former Chairman Mr. Swidler certainly admitted that during his efforts in Congress. But back to the Panhandle case, in that case, the state commission was trying to regulate both the rate and the service terms, which is what is put in this case because we are arguing here about curtailment. The pipeline went in to court and sought an injunction on the ground that the FPC had jurisdiction and this Court held that the FPC had no jurisdiction over a direct industrial sale of the type LP&L has here, and it said that the state could regulate the rate and the terms, the rate and the terms. Now, may it please the court, it is from that decision, way at the end of the decision about the last paragraph or two that we find a random sentence by Mr. Justice Rutledge, at lo and behold has furnished what I called in my brief the (Inaudible) of dictum that the FPC is hanging on desperately here. That's a sentence where Mr. Justice Rutledge talked about interruptions of services and suggested that the FPC might be able to handle those in accommodation with the states. Now, to take that random sentence at the end of that decision after the majority, after the holding had been made that there was this exemption of direct industrial sale in both its rates and its terms, means, certainly that it had to be dictum because otherwise it would contradict the main holding. But it also rather much picked our curiosity and we went to the brief of Panhandle that Mr. Justice Rutledge was speaking to when he got to that point. It looked to me like he was just trying to tidy up this opinion and answer all the Panhandle's little complaints and he sure enough was doing that because Panhandle's brief was arguing that there might be a conflict between State Federal Power Commission, if this court were to hold that the state had jurisdiction of the rates and terms. So, upon looking at Panhandle's brief lo and behold, we found that what they were talking about and therefore what we have to assume Mr. Justice Rutledge was talking about, was a preposition of the initial certification of a direct industrial sale, and unquestionably nobody said, that there is no quarrel in this case about their initial certificate authority as a transportation matter. And that's what Mr. Justice Rutledge was talking about and it furnishes the FPC no comfort here whatever. Now, over to the Transco case, which I think is really the dispositive situation here. That case Your Honors, was a transportation case. In that case an electric utility in New York state bought some gas down in Texas and wanted the pipeline company to haul it for them, transport it for them to New York. And the matter came before the FPC on a transportation certificate, the very thing that is in dispute here and the thing that they say, they have a continuing jurisdiction over. Now what did the FPC do there if they're ever going to be right, it would be in this case, and what happened. This court held just as squarely as can be, Chief Justice Warren said, “There is only a veto power in the transportation authority of the FPC, only a veto power.” And of course I think veto power implies initial power anyhow but those are Chief Justice Warren's exact words and then in less than one page later, he said, that the FPC as itself understands does not have allocation power, complete allocation power to use his exact words. So, Your Honors, it seems to us just as plain as can be from Panhandle and Transco, that you have the second peg in the FPC coffin because there is absolutely no authority in the FPC over a direct industrial sale or the transportation of gas for a direct industrial sale.
Byron R. White: I take it that if the contract here between United and LP&L had expired and United said to LP&L we are only going to send you half as much gas from now on, that ceased transporting that much to LP&L that you say the United wouldn't have to get permission from anybody?
Andrew P. Carter: No, I think Your Honor at that point at the termination of a contract, you have a situation then developed that is akin to a new certificate because now you're going to have a new contract, so I think if United took that position --
Byron R. White: What if United said, we aren't going to send you anything?
Andrew P. Carter: They said, we are not going to send you anything, I think we would just have to go look for another supplier, Mr. Justice White.
Byron R. White: But as far as I know you would probably have to but wouldn't United have to get consent of the FPC before it terminated this transportation?
Andrew P. Carter: Actually, I have my own debates within myself as to that to give you an honest answer --
Byron R. White: Well, I mean within the Transco and I suppose that would be a veto if the FPC might say, -- if LP&L came up to the commissioner and says, please don't give them consent, you would say, would the FPC have veto power over that termination?
Andrew P. Carter: I would think probably not, Mr. Justice White. I would think they might be able to --
Byron R. White: You must say that.
Andrew P. Carter: No, I don't think so. I haven't really thought it through to find out whether it helps me or not actually. In other words you are little ahead of me. Now, I think the third key and I will have to try to travel through this rather quickly although, it's halting sort of thing and that third key is the FPC actions themselves and to try to briefly cover it up, I will put it this way. In the City of Hastings case back in 1954 in Footnote 3 of that case, the court commented on the commission's statement that it had been to Congress, to recommend that it “extend our jurisdiction over interstate sales by natural gas companies to include direct sales to industries and sales to utilities which are not for resale.” That's the case you have before you today, that's us. The commission obviously didn't get that sort of authority, nothing had been done to the Act since 1954 and then up to 1963 we come, and we find that, in 1963, Mr. Swidler who was then the Chairman of the FPC and who has a reputation as a very knowledgeable man in this field, had this to say to Congress. He is talking now to Congress and he says, “under existing law, the commission's authority is limited to sales for resale in interstate commerce. Hence the price and other terms,” that's my emphasis, “And other terms of a direct sale by pipeline to an industrial customer,” and that's us, “outside this field of this commission's regulatory authority.” That's the Chairman himself speaking and he then went on to ask Congress, to give them the authority to require that interstate industrial gas sales, that's us, will be made at such prices and on such terms as to realize the potential benefits of such sales to both industrial and domestic consumers and Congress turned him down. So, now we come up to 1970 and we are getting rather close up to date, and in 1970, this same commission that's appearing before this court and saying we have got this plenary authority, said to Congress that it's recommendation was that Congress enact “a new subsection to Section 7 of the Natural Gas Act, that would enable the commission to determine when an emergency exists, so as to require and now I am emphasizing lower curtailment and allocation,” That's what's being attempted here. Low curtailment and allocation of gas by any gas company whether or not it is otherwise subject to the commission jurisdiction. Now, the FPC says in its reply brief that the effort there was to reach distribution companies in intra state pipelines. Now, Your Honors with all respect to the FPC and I am not saying this meanly but that's just solemn nonsense on their part because they already have a reach of distribution companies by way of their authority over the pipelines.
William H. Rehnquist: Mr. Carter, turning back to 1(b) and in some of this authority that it grants in the first part of the statute, do you conceive the reservations in the latter part of the section, to take away parts that were granted in the first section or are they simply a statement of the adverse side, simply pointing out what wasn't granted?
Andrew P. Carter: I think they are a very carefully phrased reservation of the powers to the states, so that if you could look at it this way and I am not saying that it's the only way to look at it, but you could look at it as though those first portions of that section or the statement of jurisdiction by the FPC, and that the latter conservatory proviso is to indicate which portions of that upper part are actually reserved to the states.
William H. Rehnquist: So, you say then, that were it not for the provisos, the granting would give broader power if it stood by itself?
Andrew P. Carter: I am not sure, I understand that question, Your Honor, if you mean if the two sections suppose were separated?
William H. Rehnquist: Yeah, assume that the granting provisions stood by themselves and what you refer to as the conservatory provisions were absent. I take it then you would feel that there were more authority conferred in that situation in the way this section is written down.
Andrew P. Carter: Oh, yes, I do think that. Now, I think I had just about finished saying what I had to say about the FPC actions themselves of going to Congress to ask for an authority that they are now saying to this Court that they have, and I think that the best evidence of an agency's lack of jurisdiction is the agency's own admission of that lack of jurisdiction. So I consider that the third peg in the FPC coffin here, and I turn at that point to the issue involved in what is known as a Green System. And if Your Honors would refer to the first Appendix in our brief which is about midway, it's a foldout map and I assure to court that we have no idea here of emulating any popular magazine. But this foldout map shows, I think the location and the configuration of the Green System very clearly. And Your Honors will note that the Green System lies in the very deep part of the, south part of Louisiana, which means you are really getting down south. And that Green System, Your Honors, is a system that was designed and constructed to be an intrastate system, as you can see merely by looking at it. And it's a self-contained separate system, and in the court below, by United's own witnesses, we were able to prove that this line is located wholly in Louisiana, the gas going into that launch produced wholly in Louisiana. It's shipped wholly in Louisiana, it's consumed wholly in Louisiana. We also show that there was 2.6% or 2.7% of gas from what's known as a Black System, which is an interstate line nearby. It was artificially injected into that Green System by United in 1970, and I say artificially for this reason, the proof also shows that they need not have put that black gas into the Green System. And indeed one of their wholly owned subsidiary companies breached some of its contracts in not putting enough green gas into the system. And so you had a situation there where practically everything about it is intrastate. The Fifth Circuit looked at that whole situation and they on the teachings of the LoVaca case out of this Court, decided not as FPC has said to the Court today that this matter was de minimis. It's 2.6%, that had nothing to do with the holding actually. The Court will find upon reading the Fifth Circuit decision that the decision on the Green System went off on what is known as the channel of constant flow which is a teaching coming out of the LoVaca case, also impliedly out of Amerada.
Warren E. Burger: Didn't our recent case in Florida tend to undermine your position on that?
Andrew P. Carter: Not at all, Mr. Chief Justice, because you have in the case of the Green System, a wholly different channel, there is a different pressure from the Black System. Unlike in Florida Power where you had some interconnections, you see electricity is traveling on the same level, let's put it that way. Here, the pressure in the Green system is at a wholly different pressure than the Black System, so in order to put gas from the Black System into the Green System, you have to manipulate valves and push it into that system, and you can't get it back out of the Green System because the pressure is low. So, this just guides you naturally into this theory of the channel of constant flow and that's what the Fifth Circuit went off on which was LoVaca all over again. Finally, on the Green System, I think we just get down to a case of common sense, Your Honors. Here is a pipeline looking at that map you see where it is, it's laying right on top of some of the largest natural gas fields in the western hemisphere. And yet here, are people telling us that they have got to inject some black gas, some interstate gas into this Green System in order to make it viable, that's like chopping ice in Greenland and shipping it to Alaska. There's just no sense to that sort of --
Byron R. White: What was the Court's power to do this ab initio in a suit like this rather than on review of the Power Commission?
Andrew P. Carter: Mr. Justice White, the FPC voluntarily walked into this cases. This case started out as a simple injunction suit that pulls our contract.
Byron R. White: Let's assume it hadn't walked into it, and the United would have had to plead the primary jurisdiction.
Andrew P. Carter: Even if it had not walked into it, I would say to you that once it got into it and took part then the Panhandle case applies --
Byron R. White: Let's assume it never was in it.
Andrew P. Carter: Well, if it never was in it, I don't think you would ever have the question of primary jurisdiction arise.
Byron R. White: Well, I don't know, United easily could have raised it. So it's usually raised. Let's assume United had raised it.
Andrew P. Carter: It might have made a difference.
Byron R. White: It could have been arguable primary jurisdiction in the Commission?
Andrew P. Carter: I don't think it would have been, but it might have.
Byron R. White: But in any event the Commissions coming in and litigating the issue curative --
Andrew P. Carter: I think it did in terms of what has actually happened here, yes, Your Honor. I imagine my time since I see the white line is apparently just about to expire, I will just close Mr. Chief Justice by saying to the Court that what we are saying in essence here and all that we are saying is that we think this Court should stick by the duality of regulation that Congress prescribed, that was put into the Act and that this Court went by in Transco and Panhandle. I thank you.
Warren E. Burger: Thank you, Mr. Carter. And Mr. Gooch, you have six minutes of the time that you reserved.
Gordon Gooch: Thank you, Mr Chief Justice. It seems to me most clear from looking at the legislative history of Section 1 (b) of the Act. When you look at the committee report itself, it says that the language but shall not apply to any say other transportation or sale. Legislative History says that the coded words were not actually necessary and were put in to replace the language that had previously been in the prior draft of the Bill which was H. R. 4008.
William H. Rehnquist: Mr. Gooch, would you conceive that if your opponents could bring these curtailment matters within the definition of anything that they referred to as the conservatory portions of (b) that you would lose?
Gordon Gooch: No, sir, because if we are going to lose on that ground, we are going to lose because it's not in the transportation jurisdiction because I don't think those language would be -- based on the legislative history and the reading of the statute, I don't think the 'but for' language makes any difference. In other words, as the legislative history said the 'but for' language is not necessary.
William H. Rehnquist: Okay, but then if it doesn't make any difference, if it's within the transportation jurisdiction, it shouldn't come within any of them. Conversely, if it is within one of them, it doesn't come within the transportation issues.
Gordon Gooch: Yes, I agree, sir. Now, the Legislative History of 4008 specifically had, 4008 had a clause in it that said that this shall not apply to rates, charged to direct industrial usage, or any other rates, and when you look at the hearings, the whole issue was rate jurisdiction, and this commission was not given rate jurisdiction over retail rates regardless of who made the retail rates, whether it's distribution coming or direct, and we don't claim jurisdiction over rates. This Court in the Transco, 365 U.S. 1, approximately at page 27 recognized that, that proviso was to take rate jurisdiction out, and these references to Chairman Swidler's testimony was when he was trying to get for the Federal Power Commission jurisdiction over the rates at which direct industrial sales were made because in a rate case of the Federal Power Commission now, we first allocate the cost of the direct industrial sales and throw them out. And we don't consider them no further and we therefore set rates only to the sales for resale. We exercised no rate jurisdiction over the direct industrial sale. And the cases on Panhandle, this is the first I have heard that Panhandle dealt allocations of new service because Mr. Justice Rutledge said, appellant also envisions in conflicting regulations by the Commissions of the various states in its main pipeline serves particularly in relation to curtailment of service when weather conditions or others required. I don't believe Mr Justice Rutledge can fairly be talking about initial licensing, when he is talking about curtailment in this matter. The Commission did report in its Annual Report in 1970 that it thought that it should have jurisdiction that compelled the interconnection regardless of whether it had jurisdiction over the pipeline, different types of customers because various distribution companies are occasionally served by more than one pipeline. Some distribution companies now have their own imports. Some distribution companies have their own supplies of natural gas and that would supplement and augment our curtailment jurisdiction. Mr. Justice White, 7 (b) does require. United may not abandon a direct sale until it comes in and gets permission from the Federal Power Commission. The mere fact that the contract has expired does not permit an interstate pipeline from terminating any service. 7 (b) prohibits the termination of any service until the Commission has authorized it to do so. It's not a question of terminating the sale, it's the service.
Byron R. White: Did United itself come into this or prior to the FPC?
Gordon Gooch: Yes.
Byron R. White: And under what section did it wrote this?
Gordon Gooch: It asked for a declaratory order.
Byron R. White: Under what?
Gordon Gooch: Under our regular rules of practice and procedures for asking a declaratory order.
Byron R. White: But what kind of power the Commission did it asked to be invoked?
Gordon Gooch: Well, you see United already had a curtailment plan as part of their tariff and they did not have to file a new curtailment plan at that time and they asked the Commission, if they were faithfully following the curtailment plan that Commission wanted to follow, and so that would be under -- in my view under both Section 4 and 5. And the Commission set it down for hearing.
Byron R. White: You said, they already had a curtailment plan?
Gordon Gooch: Yes, it is. They had a general tariff on file for curtailment. And they asked whether or not that should be applied also to the direct investors.
Byron R. White: How long had that been filed?
Gordon Gooch: Over several years sir. I don't recall, 6 or 7 years or perhaps even longer. And then when the Commission found that seven pipelines are having to go to curtailment, fourteen pipelines had to buy emergency supplies of gas. When the Commission could anticipate that, that was happening and the interstate pipeline were unable to meet, the Commission ordered under Order 431, they ordered all pipelines to file new curtailment plans and the Commission now has some 26 of these pending in order to make a fair allocation of the interstate supplies of gas among the interstate pipelines not the intrastate pipelines. With regard to the Green System, the Federal Power Commission intervened but all we could say to the Court when we intervened is, we have a proceeding pending in which we are taking evidence to determine what the jurisdictional status of this case is, and all of our evidence was this is what's pending before the Federal Power Commission until the Federal Power Commission completed the hearing, got the evidence, analyzed it, and took a position. We who intervened on behalf of the Commission were unable to say whether the system was jurisdictional or not, and their findings of the the Commission after review of the whole record was, that if the interstate supply of gas was shut off from that system, on a cold day 67% of the gas used in the New Orleans area would also be shut off.
Warren E. Burger: Thank you Mr. Gooch, thank you gentlemen. The case is submitted.


Warren E. Burger: Number 15, DeBacker against Brainard.
William G. Line: Mr. Chief Justice.
Warren E. Burger: Mr. Line.
William G. Line: May it please the Court. This case involves the question of whether equal justice under law means for adults only. Clarence DeBacker is in the Nebraska State Reformatory as the result of a petition files against him in the Juvenile Court of Dodge County, Nebraska alleging his delinquency because of the uttering of a possession of a forged check within intent to utter as genuine. A jury trial was demanded and denied because a Nebraska Juvenile Court Act says that juvenile delinquency cases will be handled without a jury and a quantum of proof is by a preponderance of the evidence. Habeas corpus was sought in the Court of General Jurisdiction. It was denied and the Nebraska Supreme Court in a 4-3 decision, it was a type of decision where the minority prevailed, held that the Nebraska Juvenile Court Act met federal constitutional requirements. Nebraska has a state constitutional provision requiring a concurrence of five judges to declare a state statute invalid. The position of the appellant in this case has been referred to by some of the adversaries and amicus curiaes as being simplistic and, without the evil connotations of the word, it is precisely that. Since this Court’s decision in Duncan, in Bloom, in Gault, a proceeding where a person can wind up in a penal institution for more than six months surely has all the attributes of a serious felony case.
Byron R. White: When was he tried?
William G. Line: He was tried in April of-- actually, February or March 1968 before Duncan and Bloom were decided.
Byron R. White: How do you argue (Inaudible)
William G. Line: I don’t think they’re even relevant on the retroactivity. I realize that they’re not retroactive.
Byron R. White: Well, some deal with Bloom that the state is not bound by the jury trial, is it?
William G. Line: They were--
Byron R. White: At all.
William G. Line: Right.
Byron R. White: At all. DeStefano was setting it up. It would not be retroactive beyond what, May 20, 1968?
William G. Line: May 20, 1968. This case was orally argued in the Nebraska Supreme Court on May 29, 1968.
Byron R. White: But this document said they’re point in trials beginning after May 20, 1968.
William G. Line: Right. Mr. Justice White, the position--
Byron R. White: So, how do you get around that?
William G. Line: Well, Gault left open the question of whether there was-- a juvenile delinquency case was in fact a criminal case.
Byron R. White: That’s true, but even if it was the Sixth Amendment wouldn’t bind the states to give a jury trial at the time of Gault.
William G. Line: Well, they wouldn’t at the time of Gault, but--
Byron R. White: And it wouldn’t until May 20, 1968, I think.
William G. Line: My argument is based on this premise. That--
Byron R. White: Well, do you rely on the Sixth Amendment at all?
William G. Line: You have to rely on the Sixth Amendment.
Potter Stewart: Why can’t you rely on the Equal Protection Clause?
William G. Line: And on the Equal Protection Clause--
Potter Stewart: If the state does, in fact, give a jury trial, the adult--
William G. Line: Well--
Potter Stewart: That it must to juveniles, as situated as this one was.
William G. Line: For example, an adult in Nebraska due to Nebraska constitutional procedures, the statutory decisions, you get two jury trials for running a stop sign, six-man jury in the lower Court, the 12 men jury on appeal to the District Court. So, that argument also we do rely on of course. It seems to me that this is a new case basically, and until this Court decides this question, this is the case that will-- should decide once and for all whether these labels that everyone is so fund of are-- mean anything anymore. What this case is not about of course is the rehabilitative features of the juvenile Court. No one has pointed out, in my opinion, any reason why a jury trial or an adjudication based upon a criminal standard of proof will interfere one with the ennoble benevolent features of the Juvenile Court system. For example, I can imagine a Juvenile Court judge who has a delinquent before him being able to be much more parens patriae if he hasn’t convicted him. Surely, he can say “you have been convicted by a jury of your peers. Now, let’s see what we can do about you,” and the juvenile is up to feel less resentment at the Juvenile Court process if he has been convicted by his fellow citizens with a standard of proof beyond a reasonable doubt.
John M. Harlan II: What would you say if it was turned around the other way? The judge might think he ought to be convicted, but the jury would say it was the other story.
William G. Line: That, I think, Mr. Justice Harlan, is the magic of the whole system.
John M. Harlan II: Is what?
William G. Line: Is the magic of the whole system. I think that’s the reason he ought to have it. Very occasionally, judges think people should be convicted and juries think they shouldn’t, and that’s the way it works out.
John M. Harlan II: Why haven’t Juvenile Courts had told him and not turn all over the other courts?
William G. Line: Well, it seems to me that if the Juvenile Court system means anything at all, the theory, as I understand it, is you’re not suppose to punish him. You’re supposed to rehabilitate him. Of course, I think modern penology is supposed to be arriving at that theory too. We-- the thumb screw and the right and so forth, we understood it in rehabilitation. It seems to me that it-- the Juvenile Court can still function. That merely because you give a boy a constitutional right to be tried by a jury, that you don’t then necessarily have to take away from him whatever benefits he had remained.
Warren E. Burger: Wasn’t one of the purposes of the whole juvenile concept to spare the child, the juvenile, from the traumatic experience that accompanies the whole criminal process from indictment to the prison, that is, spear him among other things the panoply of a jury trial.
William G. Line: I--
Warren E. Burger: Wasn’t that in the minds of the conceivers? I’m not talking about whether you agree with it, but wasn’t that the conception?
William G. Line: No question about it. That was the--
Warren E. Burger: Would you agree that a jury trial can be a traumatic experience for both an adult and a child?
William G. Line: It can be, but I submit not near as traumatic as winding up in a penal institution on the say so of one man when you have asked for a jury trial and on the basis of a preponderance of the evidence. I think that is so much more traumatic than a--
Warren E. Burger: In your brief, you almost seem to be asking for what Mr. Justice Harlan has just suggested, you say since his case is a criminal case in any realistic sense of the term. Now, if you add all these incidents of the other world, that is, of the adult world aren’t you going to wind up having all juveniles tried in-- I’m not talking about you personally, of course, Mr. Line. If this process continues, aren’t we indeed well on the way toward abolishing the whole Juvenile Court’s concept and system?
William G. Line: That is the other side of the coin. The argument to that effect is made earnestly, but I don’t believe realistically, Mr. Chief Justice, 90% or more criminal cases throughout this country are disposed of on pleas of guilty. Juvenile cases-- the argument is made in the amicus curiae briefs. One reason that this Court shouldn’t grant a jury trial is because it has been considered so invaluable it’s never been demanded. I think a reference is made at Denver where there were only very few requests made over period of years. And then on the other side of the coin, they say, “on the other hand, if you do make it available nationwide then it will be in such demand that the system will breakdown. We won’t be able to administrate. We won’t be able to do this and we won’t be able to do that, and--
Warren E. Burger: I suppose we can take judicial notice, although it is also in the record here apparently, of the situation in the District of Columbia, for example, and you’re aware of how far backed up they are because they have jury trials.
William G. Line: That is true and, again, if the-- surely, the availability of jury trial cannot depend upon the administrative convenience of a Court or--
Warren E. Burger: What happens to the juvenile concept if we grant bail to the juvenile when he’s 13 or 14 years old and he takes 5 or 6 years to get him to trial? Has-- is there any point in trying him then?
William G. Line: Mr. Chief Justice, you’ve run a ringer on me-- in on me on bail because that is not an issue that I am-- that I have addressed myself to.
Warren E. Burger: It is part of the whole--
William G. Line: And, that is not presented by this case.
Warren E. Burger: It’s part of the whole problem though, isn’t it?
William G. Line: It’s part of the whole problem but then, right there, I think you get into a whole new issue. It’s-- probably, people are acutely aware of it now because I read in the paper after I got here about the juvenile crime involving dropping a rock over-- off an overpass where he’d been out on bail. And so, that becomes fresh in a person’s mind but, again, bail is something that shouldn’t perhaps be just automatic. Certainly, society can protect itself from people who are psychiatrically disturbed. If they think there’s going to be a high risk of danger to society, we-- the system should be able to take care of that. The fact that there are problems and that perhaps if this Court decides that a juvenile is entitled to a jury trial, the fact that perhaps it might be used as a decision to later decision that bail rights should be enlarged I think is, I respectfully suggest, one step at a time. Here, I think the realities of the situation are-- Duncan said the purpose of the jury trial is to provide protection against an arbitrary persecutor or a biased judge. Most attorneys, I think, are willing to wave jury trial for juvenile. You’re not going to, as his counsel, you’re not going to put him through this traumatic experience unless you think that it’s in his best interest. I wanted to put Debacker through the traumatic experience because I was satisfied-- it was my judgment that he would be acquitted, although he was typically--
Potter Stewart: First of all, I suppose a jury trial would necessarily involve a public trial, wouldn’t it?
William G. Line: Yes, Your Honor.
Potter Stewart: Which, of course, would run contrary to the idea, as the Chief Justice has said, which was in the minds of those who conceived the Juvenile Court system. One of their ideas was that the proceedings be private. Isn’t that correct?
William G. Line: That’s correct.
Potter Stewart: But, beyond that, you keep talking about guilty of this offense, guilt or innocence, but the charge was that this young man, this juvenile, was a delinquent child and I suppose evidence of whether or not he was a delinquent child would go far beyond the evidence on the question of whether or not he committed a specific offense. It would also involve all sorts of things about his previous record and about his conduct generally, and his environment and reputation, and all those things that generally are entirely inadmissible in a criminal trial when the only question is whether or not the defendant committed a particularly-- a particular offense defined in the indictment. Is that true?
William G. Line: That was going into the dispositional stage, Mr. Justice Stewart. It was not referred to before the Juvenile Court judge made his adjudication, and our statute statutorily declares a person delinquent if he violates a statute of the state or a municipal ordinance. I mean, it’s-- DeBacker was declared a delinquent because he violated the forged check statute. Then, after that, the judge did go into his background, prior offenses, prior troubles with the law in deciding apparently to commit him summarily to the Boy’s Training School, but it was not an issue and the proceeding was not founded on the basis that he was delinquent generally. He was delinquent because of a forged check.
Potter Stewart: And, under the law, Nebraska is the only basis on which a person can found-- be found to be a delinquent?
William G. Line: No, they-- there’s a special supervision portion of the statute and-- Your Honor, no. It has to be-- he has to be-- violated any law of a state of any city or a village ordinance. If he’s hopeless, homeless, or destitute, he’s under Section 43201. He is a dependent child. He’s a--
Byron R. White: If they concede it involves an act to be violating a criminal statute-- They concede it involves--
William G. Line: Yes.
Byron R. White: Violating the criminal statute performed by the boy.
Potter Stewart: Necessarily so, is that true in Nebraska?
William G. Line: Yes, subdivision 4, delinquent child shall mean any child under the age of 18 years who has violated any law of the state or any city or village ordinance. Section 5, yes, a child in need of special supervision shall mean a child who is under the age of 18 years and is wayward, habitually truant, deports himself so as to endanger his morals or the morals of others.
Potter Stewart: Now can, under Nebraska law, can a child in need of supervision, as the statute define it, can such child be put into custody in an industrial school or a specialist?
William G. Line: I believe that he could if-- but not as a delinquent.
Potter Stewart: But your submission, as I understand it, is that any proceeding that can and does result in involuntary custody for a substantial period of time that, with respect to any such proceeding, the constitution provides the right to a jury trial.
William G. Line: That’s correct, Mr. Justice Stewart.
Potter Stewart: So if you’re correct in your answer, your tentative answer, as to the Nebraska law with respect to a child in need of special supervision, a jury trial would follow would also be required for such proceedings. Is that correct?
William G. Line: I think there is a difference. A child in need of special supervision, seems to me, to be a child in a status more than-- a delinquent child is a child who, by his voluntary volitional conduct, has violated the law of a state. I think that it wouldn’t necessarily apply to a child in need of special supervision. For example, if a child is found on a doorstep and becomes a ward of the Juvenile Court, I mean, the child doesn’t need a jury trial to determine whether or not somebody will look after him.
Potter Stewart: Well-- but you answered tentatively and I’m not holding you to this at all but, that your impression is that if, in Nebraska, a child is determined to be one who is in need of special supervision, he can be sent to an industrial school and, thereby-- and, there, confined against his will for a substantial period of time. Now, let’s assume that’s true.
William G. Line: Alright.
Potter Stewart: Then I suppose it would follow from your argument that the constitution requires a jury trial before he can be found to be a child in need of special supervision.
William G. Line: I think so. I have some difficulty with this concept of how you determine in advance how serious a case is going to be, as to whether the jury trial is going to be available. What-- I think if you-- if it’s contemplated in the process with this child that he’s going to be confined for more than six months, then he ought to have a jury trial.
Warren E. Burger: In this gray zone, who would make that decision, Mr. Line, Court, prosecutor?
William G. Line: Well, who’d make the decision in-- you say in the gray area?
Warren E. Burger: About the jury trial.
William G. Line: Well--
Warren E. Burger: If you add it as a matter of right.
William G. Line: Well, first of all, it would be-- I think it would require demand of the juvenile’s counsel. Second, I suppose then it requires the judge to search his mind and determine what he’s going to do with the child and there, frankly, I have difficulty. The Frank case that referred to probation being impossible for over six months without a jury trial and then if the probation is violated only a sentence of six months could be imposed. It’s-- I don’t know how a judge can determine a case-- what he’s going to do with the person before him until he knows what the facts of the case are but, apparently, it can be done.
Warren E. Burger: Isn’t that one of the considerations that led the founders of this system of Juvenile Courts to eliminate the jury and let, presumably, an expert in juvenile matters deal with it.
William G. Line: Well, I think that is perhaps more the consideration but, certainly, a Juvenile Court judge is no particular expert in deciding whether or not DeBacker forged the check or broke into a filling station. That, I think, is still within the traditional competence of the jury.
Warren E. Burger: Mr. Kuhlman.
Richard L. Kuhlman: If the Court please, first of all, I would like to point out that the reference to the young lad DeBacker being in the state reformatory, that he is there under a transfer statute which is not involve with deciding whether or not there should be a jury in juvenile cases. This is a transfer statute where the young man is transferred after a hearing at corny, and I maintain that the method to attack this is to bring a habeas corpus at the penal complex to decide whether this transfer statute is unconstitutional. This is a separate matter that should be determined. The only thing here is whether or not the trial of the young man in County Court or in the Juvenile Court need be with a jury, and the fact that he was eventually transferred to the men’s reformatory doesn’t have anything to do with this jury question.
Potter Stewart: As a separate lawsuit or a separate proceeding has been initiated attacking that transfer, did you say?
Richard L. Kuhlman: No, there hasn’t.
Potter Stewart: No?
Richard L. Kuhlman: I maintain that this--
Potter Stewart: You say the way to do it is a separate proceeding.
Richard L. Kuhlman: This is the way to attack it rather than to say that the statute which says that the juvenile is not entitled to a jury should be attacked. The attack should be against the statute that allows the transfer rather than the statute on the jury.
Potter Stewart: And this petitioner was, in fact, now transferred to an adult penal institution.
Richard L. Kuhlman: Yes, he is. The Nebraska Juvenile Code is oriented along judicial lines rather than along social welfare lines. We have included in the Nebraska statute the notice, which has always been there for years even prior to Gault, of the right to counsel, of the right to confrontation, the right to self-in-- against self-incrimination, the right to cross-examination, the right to a transcript of the proceedings, the right to appellate review. All of these things have always been a part of Nebraska’s Juvenile Court law, and this is the matter of the determination of due process. The fact that the youngsters have always had this that this is oriented along judicial lines rather than along social welfare lines.
Warren E. Burger: Should this red light be on, Mr. Clerk? What does that mean? Electronic Inadvertence, I see. It’s not. We will hear you tomorrow morning.