Document: 381 U.S. 392 85 S.Ct. 1517 14 L.Ed.2d 466 The UNITED GAS IMPROVEMENT COMPANY, Petitioner,v.CONTINENTAL OIL COMPANY et al. FEDERAL POWER COMMISSION, Petitioner, v. M. H. MARR Nos. 644, 693. Argued April 28, 1965. Decided June 1, [Syllabus from pages 392-394 intentionally omitted] Sol. Gen. Archibald Cox and William T. Coleman, Jr., Philadelphia, Pa., for petitioners. David Searls, Houston, Tex., respondents. Mr. Justice HARLAN delivered the opinion of Court. 1 In Phillips Petroleum Co. State Wisconsin, 347 672, 74 794, 98 L.Ed. 1035, Court held that Federal Power Commission jurisdiction under Natural Gas Act, as amended, 52 Stat. 821, 15 U.S.C. § 717 seq. (1964 ed.), extended to what are described colloquially perhaps somewhat loosely 'wellhead' sales natural gas by producers interstate pipeline companies resale in commerce. issue present cases is whether an company leases covering proven substantially developed reserves be sold commerce also subject jurisdiction. We hold they are. I. 2 1957, Texas Eastern, a which owns operates transmission system extending Philadelphia-Newark area, executed purchase contracts with Continental Oil Company, Marr, Sun General Crude their production Rayne Field, Louisiana, at initial price 23.9¢ per Mcf.1 applied certificates public convenience necessity authorizing them sell Eastern. Eastern certificate permitting it build new facilities connect its Field. After hearing, spite objections several intervenors price, examiner issued decision recommending grant requested certificates. However, before acted on examiner's decision, Appeals Third Circuit handed down Public Serv. Comm. New York FPC, 257 F.2d 7172 (the 'Catco' case), reversing order granting unconditional ground applicants had burden showing proposed sale 22.4¢ was justified necessity, not been sustained. Thereafter case permit withdrawal applications (1.5¢ higher than Catco price) canceled contracts. parties then agreed different method achieving objectives. 3 Under plan formulated parties, instead making conventional wellhead purchases gas, buy producers' leasehold interests Field lands located. provisions lease-sale agreements were such very close economic effect gas. proven, field developed.3 still connecting called original plan, same volumes flow into system. lease-sales cover no minerals except condensate, all other mineral rights being reserved lease-sellers, management agreement Oil, one sellers, continue do bulk work.4 Payments could accelerated if exceeded specified amount, purchased through intermediate corporation so Eastern's liability would limited fell below expectations.5 Completion transfers conditioned upon issuance necessary Commission. 4 granted request reopen proceedings consider issuing overruled made Service prices paid justified, noted 'Texas has filed application acquisition we have authority certificate.' 21 F.P.C. 860, 864. 5 Soon thereafter transactions completed began receive distribution. review Commission's action District Columbia set aside because language tenor appeared approve agreement. 109 U.S.App.D.C. 289, 287 143. court thought 'no importance here proposes acquire will themselves be, virtue change form, beyond regulatory control Commission,' id., 292, F.2d, 146, since regulate certification over regardless themselves. therefore remanded, stating that: 6 'Two courses open It may, clarification presently review, expressly disclaim any approval applicant. * Or may record proceeding establish adequate evidence costs incur consistent necessity.' Ibid. 7 chose proceedings. hearings examiner, decided question themselves, opposed facilities, foreclosed either previous rulings or mandate Circuit. On merits, holding inquire transaction cast 'would exalt form substance, give greater weight technicalities contract draftsmanship achievement purposes impair our ability received pipelines detriment ultimate consumer.' 29 249, 256. 8 asserting lease-sales, concluded interest them. Reasoning effective regulation difficulty estimating unit impossibility providing continuing one-shot nature sale, ordered given six-month period reframe rectify these alleged infirmities. 9 Appeal taken, Circuit, but Fifth pursuant alternative routes appeal provided 19(b) Act.6 That reversed. interpreted this Court's FPC Panhandle Pipe Line Co., 337 498, 69 1251, 93 1499, those involved 'relate gathering thus outside *.' 336 320, 325. view, unnecessary decide earlier established 'the law case' jurisdictional question. certiorari, 379 958, 664, 13 554, proper administration Act. should questions us relating propriety disposition following assertion only must answer. reverse. II. 10 Section 1(b) Act provides '(t)he shall apply gas.' 717(b) ed.). 11 Without impugning way good faith genuineness transactions, think clear can nonetheless considered 'sales' A statute hamstrung tied technical concepts local law.7 recognized much National Labor Relations Board Hearst Publications, Inc., 322 111, 64 851, 88 1170, when 'employee' used defined reference 'to purpose facts relationship' (id., 129, S.Ct., 860) rather exclusively common standards law. Gray Powell, 314 402, 62 326, 86 301, Bituminous Coal 1937, closely analogous phase bar. establishment minimum maximum soft coal, delivery offer coal sum above constitute violation code 50 80. large consumer leased mine located, entered contractor whom landowners facilities. claimed obtained there 'sale sale' producers, lands. rejected claim, Congress stabilize industry regulation, hampered interpretation required transfer title, sense, bring producer's consumed another party, within ambit code.' U.S., 416, 335. 12 implications Powell approaches hand manifest. were, most respects, equivalent unquestionably 1035. Indeed, context shows first aborted case, did alter objectives, merely attaining 'change form.' There differences, sure, between plan. For example, texas power make major decisions controlling further development field, told trigger 'favored nation' clauses But perfectly accomplished amounts States. significant determinative fact. To ignore undercut Phillips, (unless foreclosed, infra, pp. 404—406) properly treating meaning turn even though exemption 'production gathering.' statement gathering, sense terms 1(b), end(ed) occur(red)' (347 678, 797), read gathering' purely matter timing title transfer. mean, course, exemption, time ground. true place. Acceptance narrow shadow. Its substance lies, instead, judgment '(p) rotection consumers against exploitation hands natural-gas primary aim Act,' 685, 801, 'congressional intent (was) rates wholesales commerce.' Id., 682, 799. transaction, see Cities Corp. Kansas, 355 391, 78 381, 355, reversing, curiam, 180 Kan. 454, 304 P.2d 528, mistake so. conclude occurs ended, regulation. distinguished situation discussed hereafter, relates physical activities, processes kind affirmatively subjected This accommodation two relevant gives content national objectives expounded accomplish them, while interfering state furtherance conservation legitimate concerns. 16 Respondents argue supra, precludes result. transferred undeveloped company. Government asserted attach covered included company's rate base computation lessening might affect perform adequately obligations certificated. disagreed, encompassed exemption. 17 Two distinctions apparent. First, Pandhandle undeveloped. leaseholds developed.8 begin immediately completion connection field. substantiality consideration, more done begins journey, less resembles which, held, placed Second, Pahnandle involve commerce, intrastate Hence, problem—whether largely problem later faced resolved favor 18 broad. flat statements '(o)f course essential part production,' 505, 1256, taken particular Court; embracing each every put lease form. Concepts stare decisis statutory holdings case-by-case surrounds statute. recognize differences here, name depends process itself. III. 19 Because differ issue, reach decide—whether prior ruling case. 20 construct proceeded basis lacked transfers. assumed correctness single statement, citing Panhandle, lack leases,' App.D.C., 291, 145, relevance matters unaffected transaction; warrant arises responsibility purchaser, status seller.' 146. remand, stated 'merely without discussion *. apparent hardly proceeding.' 253. exercising inquire, became aware difficulties inquiring reasonableness having transfers, result, reconsidered possibility. extremely doubtful certiorari appropriate allegedly question, result precluded basic Furthermore, light fact followed appeal,9 eliminating possibility reviewing clarify extent mandate, compare Colgate-Palmolive FTC, Cir., 326 517, resolve doubts about construction favor. 22 believe reconsider costs. 'On correct errors remand bound act correction. administrative determination imbedded legal judicial does impliedly foreclose agency, after error corrected, enforcing legislative policy committed charge.' Communications Pottsville Broadcasting 309 134, 60 437, 442, 84 656. 23 Reversed. 24 DOUGLAS, dissenting. 25 While I dissented conceivable me majority up adhere today. irrelevant dealt constitutional matter, issues magnitude always re-examination. deal vagaries overtones, left where Peipe it, saving Congress, expand regime federal bureaucracy desires. sometimes customary distinguish precedents vanishing point, creating illusion certainty leaving shadow ancient landmark. competence before. hotly contested explicit bringing traffic gas' States, until changes it. 1.3¢ Mcf. reimbursement taxes. Affirmed sub nom. Atlantic Refining York, 360 378, 79 1246, 1312. Nineteen wells ground; respondents seven drilled. right volume nominate month found: '(1) Only strata conveyed; retain oil minerals; '(2) stripped inasmuch payment liquids; '(3) represented notes spread 16-year period, acceleration clause increased, payments geared production; '(4) By dated July 27, 1959, agrees operate including drilling managing equipment, deliver daily quantities gas; reimburse expenses operating assignment defrayed out entitled; '(5) Louisiana intermediary corporation), liable purchaser principal obligation transaction.' 254. 831, 717r(b) provides: 'Any party aggrieved obtain appeals United States circuit wherein located place business, point Frost-Johnson Lumber Salling's Heirs, 150 La. 756, 91 So. 207; LSA—Rev.Stat. Tit. 9, 1105 (1962 Cum.Supp.); LSA—Code Civ.Proc., Art. 3664. Other producing ownership Williams Meyers, Law, 26—47 ed., 1963 Cum.Supp.). See n. 3, supra. 6,

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