Legal Document

364 U.S. 137 80 Supreme Court Reporter 1392. 4 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 1623 SUNRAY MID-CONTINENT OIL CO., Petitioner,v.FEDERAL POWER COMMISSION. Number 335. Argued April 26 and 27, 1960. Decided June Mr. Melvin Richter, Washington, D.C., for petitioner. Howard E. Wahrenbrock, respondent. Justice BRENNAN delivered the opinion of Court. 1 This case presents an important question under Natural Gas Act.1 , central to case, is: When a company, proposing make, contract, jurisdictional sales2 natural gas in interstate commerce, applies certificate public convenience necessity as required by Act, requests that be limited time duration contract sale which it has entered, does Federal Power Commission have authority tender it, instead, without limitation? 2 Petitioner Sunray Mid-Continent Oil Company, independent producer gas, entered into with Pipeline transmission company. The covered considerable acreage owned by, or mineral least to, petition Vermilion Lafayette Parishes, Louisiana, about what is called Ridge field. Under agreed take annual amount from equivalent 4.5625 per cent petitioner's reserves area agreement;3 had right, addition, call any up 150 annually take. term agreement was 20 years. initial price provided 20.5 cents thousand cubic feet (Mcf.); increase one Mcf. every five years.4 3 Section 7(c) Act provides "no natural-gas company * shall engage transportation subject jurisdiction unless there force respect such issued Commissioner authorizing acts operations." held Phillips Petroleum versus State Wisconsin, 347 672, 74 794, 796, 98 L.Ed. 1035, virtue § 1(b) sales pipeline "in commerce resale ultimate consumption" came within scope Act.5 no field question. Accordingly, order carry out its United, necessary petitioner apply Commission, did. Petitioner's application contained request sought "provide own expiration on so authorize Applicant cease delivery thereunder at time." upholding examiner's recommendations, rejected contentions should cover only itself, tendered limitations.6 19 F.P.C. 618. applied rehearing Commission's order. Basic this contention "The issue applicant more than whole some part *." denied application. 1107. 5 did not avail itself undoubted right stand firm application, reject proffered certificate. Cf. Atlantic Refining Public Services Comm., 360 378, 387-88, 79 1246, 1252, 1253, 1312.7 Instead accepted commenced deliveries reserving object, review, certificate's unlimited nature. Appeals Tenth Circuit objections, affirmed 267 Reporter, 2nd 471. In view importance presented, we already alluded, granted certiorari. 361 880, 151, 118. We are Appeals, affirm judgment. 6 practical reasons behind superficially self-abnegating desire rather authorization obvious study Act's provisions. Obvious also damaging effect acceptance would upon policies Act. I. 7 7(b) regulates abandonment companies their facilities services Commission.8 section follows common pattern federal utility regulation9 forbidding "without permission approval first obtained." extend service finding "that available supply depleted extent continuance unwarranted, present future permit abandonment." proposal terms expire when expired. Thus end period, become free supplying market further leave having been made findings Congress deemed necessary. 8 If contentions, want grant permanent where for, were sustained, way clear seek certification period thus automatically date, untrammeled regulation, reassess whether desired continue serving market. And contracts—as 1947 companion bar, Sun 170, S.ct. 1388, might provide termination event rate reduction Commission. theory, tying mean rates those circumstances enable obligation justify cessation being consistent necessity. 9 consequences argument do stop there. identical provisions regulate well producers. producers can insist certificates inclusion provision relieving them advance date certain, companies—whose dealings local distributing generally form "sale" them—could similar provision. individual left discontinue his supply, forced find supplier elsewhere, make connection him, service; consumer ultimately pay bill rearrangement. distribution economy grown dependent fuel mercy. this, though primary problem led passage great economic power compared communities seeking service. See Comm. Hope Co., 320 591, 610, 64 281, 291, 88 333. 10 consequences, related control, even concrete. sun page illustrates them. must after then—under new otherwise—will require certificate, may file, pursuant 4(c) Act,10 "new" have, rates, bear burden proof investigation Act,11 unjust unreasonable, thereupon rate, solely prospective Updated: January Term so-called Catco Service supra, 389, 1254, 1312, occasion remark "the delay incident determination proceedings through certificated reviewable appears nigh interminable." At oral argument, counsel confirmed contested major producer's finally adjudicated six years since Court's decision case. contrast protections if conclusion original remained full effect. Then charged otherwise filed changes 4(d) 30 days' notice public.12 4(e), complaint State, state commission, municipality, sua sponte, hearing suspend effectiveness months.13 hearing, shoulder proving just reasonable. concluded suspension increased could collected ad interim; but empowered collect increment bond accounting, refund increase. 11 Clearly, change §§ "initial rate" 4(c), better tailored situation exists terminates, continues, one. commences particular field, definition existing accordingly protective (e), bottomed delaying of, suspending, changes, relevant. But course expires continues; situation, proposed, fit they during term. 12 apparent position compliance procedures revision likely windfall consequent squall consumers," said Catco. U.S., 390, 1254. attached leverage abandon service, contract's termination, contemporaneous approval, exercise contractual control over mode substantial indeed. And, like license continued enjoyed alike. Further, declaration today longer retroactive effect; furnish guide construction previously applications. 1388. 13 declared early aim "to protect consumers against exploitation hands companies." reiterated last Catco, observed framed afford complete, effective protection excessive charges." 388, 1253. Against backdrop claim purposes look details limited, granting necessity, proposed. 14 First. based primarily 7(e) That qualified therefor, operation, sale, construction, extension acquisition application."14 urges, makes outside limit proposes. urges language requiring able willing properly perform proposed" negates go beyond limitations inserts proposal; claimed cannot found while still 15 seems us unpersuasive face statutory language. It depends instance freightening phrase part," obviously intended give less load negative meaning nothing legislative history indicates bear. Even illumination purpose argued equal all meant sufficient specific proposed; clearly is, apart assumption relied speak contemplated parties "service" movement commencement. For authorized "sale"; 7(c),15 prerequisite, sets forth antecedent refers, thought who "engage[s] gas," refer performing 7(e). Certainly 7(c). structure same feature,16 themselves17 looks way. 16 Furthermore, requirement points—that nature, two-part made: proposed." Thus, evident matters required—the extension, making sales—must justified relate. gives positive indication something quite simply forbids To sure, requires question; surely willingness inferred enter long-term contract. say applicant's respect, regulation turn regulated enterprise it.18 proposed imply represents. verbal lack persuasiveness. 17 Second. Once pass parsing consideration purpose, practice given becomes inescapable. outlined serious regulatory scheme entail. These readily averted other means suggested 18 urged interest award attain refusing applications one, intimating favorably regarded. action originally judicial review; once prayed indirect method attaining meet condemnation arbitrary. There suggestion use power, 7(e), attaching "such reasonable conditions require," attach "condition" permanent. again, directly established, existence achieve indirectly conditioning doubted; requested "term condition" all.19 think need restricted these dubious methods. supports here long drawn distinction between underlying performs manifestation—the relationship—which takes moment. example, file schedule explicit adjustment time—even foreordained precise amount. Yet subject, "change" 4(e)—however upward start. Cr. Texas Transmission Corporation Shell 363 263, 1122. evidence engages distinct relationship upheld Episcopal Theological Seminary Southwest 106 U.S.App.D.C. 37, 269 228; Bel Cir., 255 548, cases; Continental 236 839; Cities Producing 233 726; Mississippi River Fuel 121 159. Pipe Line Memphis Light, & Water Div., 358 103, 110, 194, 198, 153. contemplate seller's inhere accord, unchecked scheme, hard believe contracts providing discontinuance taken continuing imposed outlasts sale. As 1942 expiry 7(b). 3, 9. ruling Commissioners office Act.20 fundamental broad court enjoy wider latitude review. 678, 1035. implementation detail setting before it. followed, see Panhandle Eastern 167, 172, pointing again implemented, afforded weight make. 21 Third. considerations, Mobile Corp., 350 332, 76 373, 100 establishes dominant factors impel put claims principle (unlike many schemes)21 general preserves integrity private contracts, judgment below conflict principle. 22 states accurately enough establishes. pages 338, 344, 377, 380. asserts follow. Mobile, seller not, violated because built system foundation contracts. corollary act, he act unilaterally 4. 23 violates United. During term, both bound members industry. expires, petitioner, will deliver latter's Commission; how disturbs then, question, United's consent. inequality, then corresponding distributors, obligations too; fulfilling desires stability furnishes discovered each side bargaining strength. event, prospect impairs beside point. 24 short matter recognized two sources inherent established Act—the power. now stabilizing factor Not reading underwrote, severe incursion prices gave confirmation. Our rest arguments, leads reiterate our holding implication recently Catco: An producer, movements controls basis "gas initially dedicated use. Moreover, withdrawal approval. operator, although captive remedy himself." 1312. has, said, expired permits hold today. Pennsylvania 343 414, 423-424, 72 843, 847-848, 96 1042. II. 25 limitation objections fall readily. contended order, may, produce contemplated, offend production gathering gas." point raised here,22 evaluation proceeding, facts presented context 7(b), intimate merit.23 Other seem directed show interest, taking supporting issuance indulging erroneous notion 239 97, reversed grounds 353 944, 77 792, 794. procedural formulation discretion discussed. much fact operations despite showing resources shorter inconsistent approach here.24 From presence prove physical rendered them,25 follow care lest problems continuation complicated legal contends. 27 Finally various advantageous hand, completion determine themselves serve considerations hence decide compel different certificates, whether, light provisions—particularly policy expressed 7(b)—it proper rely demonstrated indicating that, policy, warranted 28 Affirmed. 52 Statutes-at-Large 821, amended, Code KF62 717-717w, Annotated KF65 U5 717-717w. consumption domestic, commercial, industrial, use, engaged used 717(b), 717(b). redetermination Article IV, redeterminations. IX prices, downward escalation, accordance index Department Labor. note 2, supra. reached dissent. dissent, Connole, insofar failed condition staff contended. aspect brought review proceedings. Of economics industry preclude unyielding position. 394, 1256. text provides: "No portion facilities, obtained, due 824, 717f(b), 717f(b). 1(18) Interstate Commerce added Transportation 1920, 41 477, 49 1(18),49 1(18); 214(a) Communications 1934, amended March 6, 1943, 57 11, 47 214(a), 214(a). "Under rules regulations prescribe, schedules charges classifications, practices, affecting charges, together manner affect relate services." 822, 717c(c), 717c(c). pertinent part, 5(a) "Whenever motion charge, classification demanded, observed, charged, rule, practice, unjust, unduly discriminatory, preferential, classification, thereafter force, fix 823, 717d(a), 717d(a). "Unless orders, relating thereto, except thirty public. Such filing keeping open inspection stating plainly 717c(d), 717c(d). authority, either initiative complaint, once, answer formal pleading notice, concerning lawfulness and, pending thereon, delivering affected thereby statement writing suspension, operation defer months effect: Provided, industrial only; hearings, completed goes effect, orders reference thereto proceeding initiated effective. filing, Where effective, bond, approved amounts ordered keep accurate accounts received reason increase, specifying whom whose behalf paid, decision, refund, justified. involving charge increased, questions preference speedily possible." 717c(e). "Except cases governed provisos subsection (c) section, conform requirements, rules, thereunder, acquisition, necessity; denied. rights require." Added February 7, 1942, 567 84, 717f(e), 717f(e). person undertake acquire operate extensions thereof, operations: however, predecessor bona fide amendatory route routes operated time, served proceedings, ninety days 1942. Pending lawful. "In set thereon interested persons prescribed decided procedure (e) accordingly: temporary emergency, assure maintenance adequate customers, exempt requirements interest." 56 83, 717f(c), 717f(c). 10, contain "services" "transportation sale," recognizes "contract" 'affect to" services. noted sales, "services." 8, correct saying involve "service," difficult applicability concedes applicable. fact, contention, examiner summarized amounted "would prefer e regulation." 618, 635. One described conditional discussion appear negate inference ordinary sense sentence 99, rested alternatively ground supported above. F.P.C., 620. resort superfluous. Manly, Draper, Scott, Seavey, signed 1938 See, e.g., Armour Packing States, 209 56, 80-82, 428, 435-436, 681. objection considered failure do." 19(b), 831, 717r(b), 717r(b). comply proviso 7(a) distributors. 717f(a), 717f(a). 7(a), rejected. Primary reliance Transwestern 391, 395-396, Trunkline 704, 709, presently shown deliverability life limitations. companies, failing depletion thereof thus, kept applicants.

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