Document: 365 U.S. 1 81 S.Ct. 435 5 L.Ed.2d 377 FEDERAL POWER COMMISSION,v.TRANSCONTINENTAL GAS PIPE LINE CORP. NATIONAL COAL ASSOCIATION et al. v. TRANSCONTINENTAL Nos. 45, 46. Argued Nov. 15, 1960. Decided Jan. 23, 1961. [Syllabus from pages 1-2 intentionally omitted] Mr. Solicitor General J. Lee Rankin, Washington, D.C., for petitioner in No. 45. Jerome McGrath, petitioners Messrs. Randall LeBoeuf, Jr., New York City, and Richard Connor, respondents both cases. [Amicus Curaie Chief Justice WARREN delivered the opinion of Court. The question these cases is whether Federal Power Commission has gone beyond scope its delegated authority denying a certificate public convenience necessity under § 7(e) Natural Gas Act 1938, 52 Stat. 821, as amended, 15 U.S.C. 717 seq., U.S.C.A. seq.1 principal respondents2 are Transcontinental Pipe Line Corp. (Transco), pipeline company engaged transporting natural gas interstate commerce, Consolidated Edison Co. (Con. Ed.), utility City which uses boilers also sells to domestic consumers. In 1957 Con. Ed. contracted purchase producers Normanna Sejita fields Texas at 19 1/4 cents per Mcf., contracts sale containing prohibition on resale by This transaction commonly labeled 'direct' and, because it does not entail subject Commission's jurisdiction except insofar 7 requires transportation pursuant sale. 2 then arranged with Transco what called record 'X—20' service. Under contract, agreed transport 50,000 Mcf. daily use Ed.'s boilers, principally two Waterside station were being fired coal. Additionally, during 60-day peak period, sell Transco's own reserves without restrictions resale. supply was designed customers winter period when heating demands their highest. sought proposed X—20 service connection plan conduct major expansion capacity storage facilities. 3 Before hearing examiner, application opposed FPC staff groups representing coal industry. intervened favor proposal. offered proof that met all conventional tests—adequate reserves, facilities market gas—and this showing, one immaterial exception, never been challenged. However, FPC's argued vigorously interest would suffer petition granted. Among grounds advanced be transported industrial disposition an 'inferior' standpoint conserving valuable resource; authorization similar direct sales users result pre-emption detriment consumers competing supply; effect sale, well resulting increase sales, general rise field prices. These contentions presented 'policy' arguments no testimony taken support. contended return certification interest, firm reduce air pollution problem aggravated fly-ash sulphur dioxide emissions boilers. located near headquarters building United Nations, introduced expert indicating contributors area. Respondents factors propounded open consideration proceeding. examiner his determination limited consequently recommended certification. He qualified recommendation, however, statement that, if he authorized consider policy argument related end staff, come opposite conclusion. indicated respondents' concerning sufficiently compelling overcome contrary argument. 4 On review before full FPC, held broad considerations cognizable 'idea ameliorating smoke condition found unpleasant annoying * attractive one' but concluded 'more weighty compel denial grant.' 21 F.P.C. 138, 142. rehearing upon petition, 399, appealed Court Appeals. Appeals reinstated conclusion outside court relied 1(b) Act, 717(b), provides: 'The provisions chapter shall apply commerce ultimate consumption domestic, commercial, industrial, or any other use, natural-gas companies such local distribution used production gathering gas.' 6 expressed sympathy contention had given inadequate weight factor; holding below appear based ground. 271 F.2d 942. Court, then, Congress intended preclude basis staff. For purposes analysis, litigants have grouped into categories. first 'end use' factor reflects concern wasteful committed same token, pre-empt space pipelines might otherwise superior uses. second may 'price' involves fear sale—which executed price higher than maximum fixed producing districts here involved—would field, thus triggering contracts. 8 light said prior occasions term 'public necessity' analogous statutes, ready inference power factors. example, States Detroit & Cleveland Navigation Co., 326 236, 241, 66 75, 77, 90 L.Ed. 38, that: 9 guardian determining certificates performance function entrusted wide range discretionary authority. Interstate Commerce Parker, 60, 65 1490 (89 2051). Its only appraise facts draw inferences them bring bear judgment determine analysis total situation side controversy lies. doubt will adequately served resumption left existing carriers entitled respect complicated problems. *' See Railway Labor Executives Ass'n, 315 373, 376—377, 62 717, 719 720, 86 904. 10 fact, interpreting very section, we '§ evaluate bearing interest.' Atlantic Refining Public Service Commission, 360 378, 391, 79 1246, 1255, 1312. (Emphasis added.) correctly point out Congress, enacting did give comprehensive powers over every incident production, Rather, 'meticulous' invest certain aspects leaving residue state regulation. Panhandle Eastern 332 507, 68 190, 92 128. Therefore, necessary care whether, despite accepted meaning necessity,' trod forbidden ground making decision. 11 End use. No disputes wasting resource paramount.3 As see it, case through power, prevent waste jurisdiction. One apparent method preventing limit put, another, more abundant fuel serve equally well. Thus case, often past,4 declared assumption fuels, particularly coal, adequate substitute5 areas where fuels abound. respondents, while conceding premise wasted readily available, argue awarded conservation; rather, veen reserved States. legislative history Act. 12 When initially enacted indications primary arbiters conservation 1938 1936 report rendered Trade Commission6 section devoted stresses bodies adopt corrective measures. final recommendation regard contemplated authority, federal agencies relegated reporting function. formed ultimately passed reveals secondary role regard.7 13 1940, reported dissatisfaction 7. version restricted already another company; wished extend virgin territory, act. felt limitation barred considering 'the social economic various fuels' proceeding, Kansas 29, 27, 1940 Annual Report, urged restriction deleted order weighed. language relevant case: 14 presently drafted enable treat fully serious implications problem. should raised displacing less create hardships industry supplying market, time rapidly depleting country's reserves. Although, perhaps 20 years, could so priced offer saving costs, mean simply costs must eventually paid ignored. 'Careful study entire lead functions rather areas. Thus, especially adapted water urban homes buildings hest processes require concentration heat, flexibility control, uniformity results, Industrial appears include treating annealing metals, operation kilns ceramic, cement, lime industries, manufacture glass forms, raw material chemical steam is, most circumstances questionable economy.' F.P.C.Ann.Rep. (1940). 16 implemented submitting amendment restrictive eliminated, substantially 1942.8 During course hearings amendment, reiterated position report, Hearings House Committee Foreign H.R. 5249, 77th Cong., 1st Sess. 82, Committees bill indicates framed response complaint. H.R.Rep. 1290, 3; S.Rep. 918, 2d 1—2. 17 It true, course, reports do set haec verba. pertinent Report states 18 bill, eliminates objections present 7(c) above mentioned. By legislation, jurisdictional door opened construction extensions interests competitive interests. accomplished, moreover, undue disturbance operating arrangements companies.'9 supra. Consequently, look coin—the health industry—because mentioned explicitly. take account consistently pressed amendment—that undesirable injured but, important, short place fuel. voice opposition there indication unwilling chief proponent anything sought. curious infer intent quoted above. think plain acquiesced excerpted signifies acquiescence. noted addressed itself 1942 Hope 320 591, 617, note 30, 64 281, 294, 88 333, East Ohio 338 464, 468—469, 70 266, 268—269, 94 268. And, conceded decision either Ohio, clear those directly Respondents, contend subsequent made statements occasion inconsistent case. particular, excerpt 1944 First Five Years stated: 'In cases, act, freely permitted intervention representatives railroad, labor, concerned fuels. extensive evidence economic, sociological, technological competition, strongly deny attach severely sold. 22 'It unanimous view inasmuch conprehensive deal consumed, granted regulate rates industry, duty seek exercise until amended confer specific desired exercise.' F.P.C., 15. 23 heavily idle irrelevant inquiry. precise admissions. 'comprehensive' consumed' alone.10 say certificated put nor notice. contemporaneous reading press us,11 construed admitting lack formulate flat rule against 24 connection, realized are, definition, limited. Koplin, Conservation Regulation: Allocation Policy Yale L.J. 840, 862. cannot favors;12 can veto balance weighs Moreover, intrastate since large percentage sold so-called within States,13 further curtails conservation. this, consistent rational. hand, stated sought, awarded, A striking example thinking revealed reasons 982, 1949 25 '* establishment of, adherence to, thereof will— 26 '(1) promote safeguard, far possible, national defense; 27 '(2) conserve utilization affords highest benefits public, reasonable service.'14 28 passage on, among others, following ground: 29 10-point would— 30 Conserve service; 31 'This, proposes utilized. effective great bulk inferior distributing aware question. believes proper matter proceedings.'15 32 language, realizes distinction between enjoys complete allocation power.16 And feel entirely disposes purported ambivalent behavior. 33 There broader principle stands contentions. motivated desire 'to protect exploitation hands companies.' Sunray Mid-Continent Oil 364 137, 147, 80 1392, 1398, 1623. To end, 'meant regulatory scheme.' 520, 197, Utilities Fuel 317 456, 467, 63 369, 375, 87 396. regulation; much But, important aspect unregulated. dispute arises inclined approach negatively, raising possibility 'noman's land' created. Compare Guss Utah Relations Board, 353 1, 77 598, 603, 601. That say, borderline congressional explicit ask practicably find cannot, impelled decide governs. 34 'economic' State. attempted exert influence 'physically' practices improper spacing flaring unused loss properly State; even posture, usurped regulating agree. 35 rely, some mention control said, oriented towards pointed out, emphasis physical State reference probably gasoline extraction carbon black. page 947. terms state-controlled commerce. expected initiative enforcing type wish prolong long possible Michigan-Wisconsin Calvert, 347 157, 74 396, 98 583; Com. Pennsylvania West Virginia, 262 553, 43 658, 67 1117; Oklahoma 221 229, 564, 55 716. Consuming gas, Michigan 341 329, 71 777, 95 993, deficiencies system context apparent—unless cooperate common regulation, producer pick anxious scarce irrespective use.17 purpose 'attractive gap' conclude 'end-use' Commission. 36 Price. read opinion, objection forecast unregulated prices allowed resale18 attract high-bidding purchasers lever upwards 37 claim masks true which, according bar absolutely, forcing transactions regulated channels. absolute runs supra, limits 38 Were correct interpretation action forced agree overstepped bounds. Certainly our previous connotes flexible balancing process, weighed determination. Nevigation supra.19 Indeed, argue, doubly objectionable sales. Examination recurrent absence controlling stated, 'countervailing suffice tip grant requested Transco.' 141. difficult this. Furthermore, lingering point, dispelled fact has, many occasions, consumer applicant strong. See, e.g., Houston Corp., 118. actions speak louder unsupported allegations. Northern 1634.20 39 merely underlying fair whole exalt form substance attempt aggrandize jurisdiction; whenever discussed nonjurisdictional nature tied discussion substantive evils seeking increased generally.21 40 therefore, proceeding or, accurately, inflated charged future We recently answered whether: 41 '(T)he keeping line approval rises *.' independently Where independent jurisciction exist 1(b), notice curtailed. 42 faced precisely problem, several here. Colorado 324 581, 829, 89 1206, fixing rate base measurement wholesale rates, value company's facilities, though 1(b). rejected familiar ring context: According unsuccessful litigant, includes base, 'it regulates Act.' Id., 600, 838. Similarly, 635, 646, 827, 1241, dictum lacks fix fixes jurisdiction.' 44 themselves controlling, indicate least overly broad. particular section—the contemplates regulation critical inquiry govern. 45 effects generally. attempting compared determinations consuming commission make exercising Certainly, retail E.g., recognized passed, Powell, Note, Physics Law—Commerce Electricity, 58 Harv.L.Rev. 1072, excepted reason. 709, 75th objected need hypothetical situation. entailing overstep bounds State, illustrates improbability commissions it; seems sort uniquely fitted scrutiny. Particularly Court's brought out-of-state sources. conflicting regulations enforced different bodies, interruption service, untenable position. stating 46 'There substantial conflict probability strong outweigh vital referred requiring states. develop, interrupting largely related, appellees accommodation states.' 523, 198. 47 scheme; impose transportation, resource. not, nature, deal, irresistible nonregulation. Cir., 232 467. 48 Respondents' abused discretion took cognizance dehors pay sufficient attention recorded pollution. erred going record—was concur statute, required 'present necessity.' Obedient command, widespread high increases. claiming adduced testimonial documentary true. formulation considerations. direction lies necessarily deductions knowledge agency. 1255.22 considerable showing appearing amici curiae founded.23 sense, seem channeling vast quantities scarcity increase. Cf. 521, 19, 49 last insufficient afforded Concededly, witness, Commissioner Department Air Pollution Control weight. himself admitted, him establish definite relation injury stack station.24 More importantly, shown methods—particularly available forms service25—could solve acted irrationally concluding insufficient. Charleston Western Carolina R. U.S.App.D.C. 234 62. 50 Neither holds generally accord sales; authorize elimination appropriate arbitrarily chosen group purchasers. All hold abuse considering, factors, preemption deciding issuance requested. reversed. 51 Reversed. HARLAN, whom FRANKFURTER STEWART join, concurring part dissenting part. 53 rested combination three determinations: (1) alleviation burning Plant City; (2) purchases enhancing gas; (3) likely purchases. 54 Though I does, amendments supports premises conclusions justify affirmance certificate. shown, bottomed almost proposition most, all, purchases, magnitude, interest. Since believe premised transaction, remand postulates. 56 At outset, procedural review. rehearing, neither 'decisive' 'determinative' importance; inferiority together, individually, justified view. failing, they my stand. I. Premises Denial. 57 manifest hence normal resale.1 Trial Examiner Staff's opposition' based, reasons, proposal obviously evade centers country interest; 59 'that non-jurisdictional activity halted others who similarly avoid way.' repeated itself. 60 adopted viewing facet direct-sale states, weighing Each worded plural. throughout speaks forbidding access purchasing restricting involved instead adverse committing regularly allowing nonpipelines, following: 61 '(I)f request soon confronted requests character *. 'How impact (of demand supply) multiple bidders 'And how continue buy competition nonjurisdictional, volume question.' p. rehearing2 acknowledged considered 'adverse public' granting 'and authorizations' including stimulating substitution present, prevalent types services involving resales 399.3 clear, characterized consumers, offensive about (excepting use). What sales? Two central opinion. First, like proposals usage meet urgent widely beneficial needs 141.4 Second, prices: relatively enough raise bidder bringing supply. How bidders, each reserve Inevitably, upward pressure levels fields. ought encourage unnecessary. Ibid. quite evidently asserted frown basis, hereafter be, unnecessary results resources unwarranted boosting Since, view, pipelines, class, unfortunate characteristics, class. harms inherent certificate, drastic alternatives. II. Postulates Which Should Have Proceeded. 69 Without purporting exhaust reach discretion, proceeded now indicated. Basically, tend unduly capacity, assert certificating powers.5 resorted Note follow blind invoked. recognize was, practical matter, impossible purchased acknowledge integral Whether resource, prices, responsible original reason why certify, tends materially area legitimate Assuming wishes consider, proceedings obscures question: envisioned Commission? ending concern. Similar pertain capacity. 4, Finally, 379, 1249, 1312, excessive price. Asserting involve assuming matters protecting citizens prevent. gas. effects, furthered considered, upon, case-by-case III. Deficiencies Report. 72 If, argued, adversely affecting later mere distributor. latter former, invalidity easily established. Once nothing added circumstance belief waste. 73 refined, although solidly grounded. unregulatable therefore distributors forbidden. So answer repeat just pre-emption—that basis. argument, namely, increasing number theoretically regulatable must, difficult-to-control-and-regulate economics position,6 unreasonable finding statutory Draconian solution proposes. lower Such whimsy statute. Is there, justifying discriminating resale? propose inferior, arises. worse, passing sale-for-resale drawn others. 75 contrary, discrimination nonpipeline flouts structure permitting greater (the sale) (sale-for-resale transportation) jurisdictional. numbers ignore statute provides wholly carrier 'carrier' carrying destination. extends wholesalers destination.7 76 These, absolutely rational selecting sacrificed eliminated toward harmful characteristic shared Even purposeful class prospective clashes companies. clearly manifested violence statute's behalf nonpipelines producers. inescapable i.e., amputation—resulting jurisdictional—is 78 regarded remanded agency reconsideration. granted, unconsidered erroneous denial. support findings expand services, way careful me leave desired, doubtless over-all mistaken proceeded. reconsideration premises, air-pollution significance, whatever score event accompanied convincing particularized findings. foregoing vacate proceedings. Section 7(e), 717f(e), '(e) Except governed provisos contained subsection (c) issued therefor, authorizing operation, construction, extension, acquisition covered application, able willing acts perform conform requirements, rules, thereunder, acquisition, extent necessity; denied. rights thereunder conditions require.' addition petitioning Ed., parties litigation. named respondent National Coal Association, Mine Workers America, Fuels Research Council, Inc. Several filed briefs California, Michigan, Wisconsin. Investigation (1948), Docket G 580, Olds-Draper pp. 6—14. end-use collected Appeals' 949, 27. long-standing amply supported Blachly Oatman, Interest, Final Senate States, S. Doc. 92, 70th Sess., Part 84 A, 1(a) 717(a), refers explicitly report. 717j, '(a) compacts dealing conservation, assemble information relative compact, obtained, together recommendations legislation carry compact aid orderly, equitable, '(b) keep current heretofore approved time, compact. '(c) chapter, shall, practicable, avail records, reports, executive departments Government, President may, Commission.' Other remarks Congressman Mapes, member committee became Cong.Rec. 6726, Col. Chantland, counsel Subcommittee 11662, 74th 66—67. originally provided, part, undertake extension netural company, acquire operate thereof, engage means new additional unless obtained 825. 4819, 4301, resubmitted 5249. read: 'No person completion force 1. finally enacted, reads: operations 948 (H.R. 5249) convenience, company.' defined Long preliminary investigations Too, views considered. 'Provisions empower uneconomic waste, 'a possibilities uncontrolled tremendous. glaring inadequacy examine finances, necessity, feasibility, adequacy services. characteristics studied. Obviously footnote appended thereto. footnote, Opinion 93—A, September 24, 1943, issuing Tennessee Transmission pipe "Interveners operators, labor unions, railroads, having stake Appalachian area, oppose applicant's space-heating constitutes dissipation resources, threatens ruinous competition. Considerable interveners supporting "We unmindful posed interveners. authorized, furnishes keenest Nor suspend indirect purposes. appears, vest permit us act arbiter gas." n. 14. reproduced 1234, 78th 3—6. 7(a) 717f(a), extensions, enlargements, impair ability render customers.' 79, 1758, 81st 165. 3. 1947 Smith summed up explained along lines pursued. 2185, 2235, 2292, 2569, 2956, 80th 685—686. helplessness dramatically illustrated re Cabot P.U.R.(N.S.) 443 (1936). Chairman resources. They developed benefit few individuals welfare future. Our conserved government acting accomplish From viewpoint, thoroughly Burritt, work vote refuse application; produce results? northern southern York. Apparently, Pennsylvania, practically control. remove exhausted. 'Further, matural state, developed. amount doubtful accomplished. receives sources boundaries exports adjoining voluntary government. yet operative electric steps urgently needed. conferred becomes primarily gained cent furnished go enrich stockholders. Let assume facts. Who gain benefited deprived profits advantages petition? tapped petitioner. tapping where, when, If imposed York, Pennsylvania; serve, assurance beneficially viewpoint 'As am heartily resources; people York? supplied definite, known, sure. But denied, benefited? point. speculative uncertain. assure diverted locality another?' attitude date speaking enactment 7, success measured examination 3, 75—78. bought Fed.Reg. 9578. trying Any mind believe, bound incomplete. error Pittsburgh 99 113, 237 741. Many listed Brief Respondent Opposition Petition Certiorari, 24—30, 352 891, 129, 86. se concentrated of: '(M)aking requirements smaller become widespread.' 399—400. tantamount saying '(O)nly thereby 953. thrust reasoning better grasped reviewing consumer, herein, commercial upheld amicus California utilities, Southern Counties Gas, reveal bidding user, California. Amici Curiae 13—14. contemplating taking advantage Reply 4—5. suggested providing customer, 71a, negotiating 63a—71a. interesting Assistant Vice testified 'they producers) allergic 108a. 48a, 111a. using interruptible averaged 78,578 day. station. receiving alleviate, solve, 89a—92a. basic forth 717(b): 399. score, dissipated 'Summary Argument' brief Court: threat arrangement small protections designed, potential new, unregulated, gas—by producer—which compete supplies currently exercises portends lasting inflationary generally, end-uses inappropriate Act's purposes, disrupt patterns growth carefully evolved years congressionally-directed (4) 'On damaging probable outweighed Con Edison's inadequately contribution boiler denied depends use,' hypothesis antitrust laws forbid buyers seller. Just stifled affected sellers agreeing single agent (and price), buyers. subfactor needed evidence. realistically, object strenuously selling distributor buying takes after manipulated created finds allows field.

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