Legal Document

379 U.S. 366 85 Supreme Court Reporter 486 13 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 357 PEOPLE OF the STATE CALIFORNIA et al., Petitioners,v.LO-VACA GATHERING COMPANY al. SOUTHERN GAS Petitioners, versus LO-VACA FEDERAL POWER COMMISSION, Petitioner, Nos. 46, 47, 57. Argued Nov. 17, 18, 1964. Decided Jan. 1965. Richard Atlantic Solomon, Washington, D.C., E. Tuttle, San Francisco, Cal., and John Ormasa, Richmond, for petitioners. Sherman S. Poland, respondents. Mr. Justice DOUGLAS delivered opinion of Court. 1 El Paso Natural Gas company is an interstate natural gas pipeline that delivers at Arizona-California border to three California distribution companies. The present controversy concerns be purchased by it in Texas from Lo-Baca Gathering Houston Pipe Line Under Lo-Vaca's contract produced a subsidiary Paso's point delivery into its pipeline. contains following two clauses: 2 'All Gatherer (Lo-Vaca) under this agreement shall used solely as fuel compressors, treating plants, boilers, camps other facilities located outside State Texas. It understood, however, said will commingled with being transported pipe line system.' 3 'It intent understanding parties hereto sale hereof not subject jurisdiction Federal Power Commission because resale.' 4 This 'restricted use' provides separate metering volumes prior their system. meter purposes New Mexico Arizona make certain amount invariably exceeds taken Lo-Vaca agreement. 5 made similar containing provision which covenants consumed operations or another plant. contract, like one, also volume Texas; includes covenant uses all times exceed amounts supplied Houston. 6 In spite these conceded sold flow stream sources least portion fact resold out 7 asserted over sales commerce 'for resale,' term § 1(b) Act, 52 Statutes-at-Large 821, 15 Code KF62 717 (1958 ed.).1 26 F.P.C. 606, rehearing denied, id., 840. Appeals reversed, one judge dissenting. 323 Reporter, 2nd 190. case here on writ certiorari. 377 951, 84 1627, 12 496. 8 We Connecticut Light & Comm., 324 515, 529, 65 749, 755, 89 L.Ed. 1150, 'Federal was follow electric energy, engineering scientific, rather than legalistic governmental, test.' And test we have followed both Act except Congress itself has substituted so-called legal standard technological one. Id., 530—531, S.Ct., 756. Interstate 331 682, 687, 67 1482, 1485, 91 1742, considered anatomy system discover channel constant flow; again Comm. East Ohio Co., 338 464, 467, 70 266, 268, 94 268; most recently Southern Rptr. (West’s) Edison 376 205, 209, n. 5, 644, 647, 11 638. result our decisions crosses state any stage movement wellhead ultimate consumption 'in commerce' within meaning Act. 9 Attempts been convention convert local transaction (Sprout City South Bend, 277 163, 48 502, 72 833; Superior Oil Mississippi ex rel. Knox, 280 390, 50 169, 74 504) segment appear only intrastate (Baltimore S.W.R.R. Settle, 260 166, 43 28, 189). But those attempts failed. Similarly, conclude when comes question what 'resale' contracts should able change jurisdictional result. 10 substantial part resold, view, invokes federal outset entire transaction. Were suppliers companies free allocate particular source use, havoc would raised regulatory scheme, construed applied Phillips Petroleum Wisconsin, 347 672, 794, 98 1035. A then discriminate favor 'nonjurisdictional' customers. Moreover, clause could immunize supplier reach regulation2 defined supra. There created ways 'attractive gap' scheme (Federal Transcontinental Corp., 365 1, 81 435, 449, 377) producing might little incentive close, since gap often involve either lower costs customers else merely higher ultimately reflected rates paid consumers States. Whether cases conjured up where original commingling there nonjurisdictional transaction3 precise not-for-resale4 need reach. Finally draw appropriate lines between 'jurisdiction' through use rule-making power. cannot say adjudicatory process method drawing case-by-case (United Public Utilities 345 295, 73 706, 97 1020) host administrative determinations. acted responsibly situation decision must upheld. Reversed. WHITE took no consideration cases. 14 HARLAN, Today's furnishes too-ready answer intricate problem regulation. reflects sort expected willing bare choice unrefined points view method, without first informed regulating agency concerned evaluation competing factors something indispensable achieving well-balanced solution such this. respective positions each possesses capacity frustrate scope regulation ordained Congress. Commission's molecular theory, accepted undefined reservations, results expanding sweeping authority resale ('nonjurisdictional' gas). respondents' contractallocation position, hand, serve legitimate interfering ability deal restricted supply 'not-for-sale,' but actually pipeline-purchaser ('jurisdictional' 16 middle ground more closely fulfill proposals now before us competent assess expert guidance Commission, given none. Lacking this, N Dec. Immigration Nationality Decisions am unwilling accept juncture position party litigation. think decline pass upon until illumined problems involved exercise powers.1 17 complexity elusiveness matters are asked best exposed vantage considering some questions allocation varying contexts give rise. 18 has, case, proposition single may nonjurisdictionally. For example, Hastings 95 U.S.App.D.C. 158, 221 31, city contracts, covering city, own plants. Although mingled common pipeline, approved, latter was, more, presented California, 1020, power electricity Navy plants dependent families. absence fatal recognized different if had transactions. U.S., 316—318, 718—719. 19 does involved, provided prorated among suppliers. 30% total 10% production, 40% use. Such essentially North Dakota Cir., 247 173, upheld approval. If Court, corollaries follow: fungible commodity, mingling alone render ineffective although identification destroyed; prices gas2 affect rate base gas, critical factor stage.3 20 issue arises allocating others not. arise commonly contexts: existing were pro rata, new added did allocate, addition thought destroy validity satisfying increase demand gas.4 converse attempting One possible determine Lo-Vaca. To modify argument respondents, constructed Coquat station (at enters system) along outflow increase, not? formerly using same compressors intends future, purpose release sale—to satisfy demand—gas purposes. 21 record put. indication construct compressor handle received unrestricted contract. demand. However, evidence remain constant, supplies increased consumers. purportedly replaces furnished suppliers, thus releasing resale, defeat analysis. 22 Another suggests probable percentages purposes, permit his rata share estimated gas. suppose running Gulf coast system, percentage flowing west input purpose. mathematically percentage, he system.5 23 recognize, course, pitfalls methods, formulae preferable either. ventured them support my belief name protecting reality involves judicial expansion authority, after due exploration proceeding, feasible method—more particularly modification contract-allocation theory—exists better fit boundaries fixed 24 undoubtedly true normally decide whether proceed field functions promulgation general rules6 adjudication.7 usually proceeded, Court's approval,8 developing procedures process. Nevertheless, good reasons why appears promising avenue approach instance. First, yielded satisfactory basic principle departure assessment kind, indeed consistent approach;9 even litigation far clear room, any, restrictive contracts. Second, industry entitled know fundamental rules conduct regard degree predictability, witness respondents whose faith transactions giving rise impugned way. Third, unlike conceded,10 permitted adopt theory expands beyond statutory limits11 full hearings formulation rule interpreting area conforms jurisdictioinal limits Fourth, fraught technical 'perplexities, geological economic,' Railroad Rowan Nichols 311 570, 574, 61 343, 345, 358, expertise necessary adjunct resolution 'Had acting experience peculiar competence, promulgated order application, very different.' Securities Exchange Chenery 318 80, 92, 63 454, 461, 87 626. courts right judgment further presently opaque area. 25 vacate remand proceedings interpretive cover cases.12 Section provides: 'The provisions act apply transportation commerce, public domestic, commercial, industrial, natural-gas engagded sale, sued production gathering gas.' 2(7) reads follows: 'When act, unless context otherwise requires '(7) 'Interstate means thereof, place insofar takes States.' Report, Statistics Companies—1962, shows 40 major $85,000,000 worth operating (principally stations), Page xviii. represents almost 4% gas-purchase-costs therefore brief companies, controls, changing actual create unregulated market benefit producers. Our reference 4, 437, 'direct' industrial users dispositive issue. refused certificate standpoint conservation end boiler inferior. assert resale' Cf. 317—318, 718—719; 31. See Elman, Comment, Rulemaking Procedures FTC's Enforcement Merger Law, 78 Harv.L.Rev. 385 (1964). opinion, ante, 370. fact, price charged exactly established concededly sales. Both constructing pipelines connect station, obtain certification pipelines. take many account ruling applications, see 377. reasonableness Amerada Corporation 334 404 (C.A.8th Cir. 1964), cert. pending, Number 585, Term, supra, allocating, allocate. Corrections made, withdrawn trunk attributed feeding line, computing percentages. Peoples Service Pennsylvania, 270 550, 46 371, 726. operate flows direction only; considerations applicable dealing power, can directions Storer Broadcasting 351 192, 76 763, 100 1081. generally Davis, Administrative Law Treatise, 5.01 (1958). 332 194, 1575, 1760, 1995. See, e.g., 318, 719. 615: 'To extent inconsistent action here, believe erroneously decided.' Compare 373. As rate-making proceedings. 1(b), quoted 368 1. Addison Holly Hill Fruit Prods., Inc., 322 607, 619, 64 1215, 1222, 88 1488.

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