Legal Document

337 U.S. 498 69 Supreme Court Reporter 1251 93 L.Ed. 1499 FEDERAL POWER COMMISSIONv.PANHANDLE EASTERN PIPE LINE CO. et al. Number 558. Argued April 22, 1949. Decided June 20, Mr. Bradford Ross, Washington, D.C., for petitioner. Messrs. Robert Pacific KF135 P2 Patterson, New York City, and Jeff Atlantic Robertson, Topeka, Kan., respondents. Justice REED delivered the opinion of Court. 1 Stated broadly this certiorari brings before us review a problem involving scope power over gas reserves natural-gas company given to Federal Power Commission by Natural Gas Act. 52 Statutes-at-Large 821, as amended, 56 83, 15 United States Code Annotated KF65 U5 § 717 seq. Specifically question be decided is whether company, subject Act, may sell leases covering an estimated twelve per cent its total without approval contrary order Commission. 2 The issue made very sharply because District Appeals have refused injunction, sought Commission, hold consummation sale in abeyance until through admittedly permissible investigation, can determine disposal these will impair ability Panhandle supply present prospective customers area which it has undertaken serve public utility. find that interest best served requiring retain reserves. strong appeal court equity remedies once legal right fairly controversy.1 3 Respondent, Eastern Pipe Line Company (herein called Panhandle), Delaware corporation, transports markets natural interstate commerce means pipe-line system runs from Texas into Michigan. In addition owns or controls gas-producing properties Kansas, Oklahoma, Texas. 4 September, 1948, organized Hugoton Production (hereinafter Hugoton), also corporation. On October 11, pursuant written agreement between two companies, transferred on approximately 97,000 acres land Kansas $675,000 cash. return received all outstanding capital stock option purchase after January 1, 1965, part produced land, at undeveloped not connected with any system. under acreage are 700 billion cubic feet. thereafter contracted Light period fifteen years November 1949, 1964, leases, which, according contract, was consumed wholly within State Kansas. 5 same date transaction Hugoton, declared dividend holders common rate one-half share each Panhandle. paid 17, Panhandle's stockholders record 29, 1948. Nothing our attention indicates control retained stock. 6 26, Commission) ordered investigation 'pursuant provisions Section 14 fa ts circumstances involved formation proposed operation transfer said naturalgas * *.' By supplementary 10, joined party, hearing fixed, show cause why they should directed cancel prohibited transferring consent distribution stockholders. Pending final determination status quo maintained Hugoton. 7 Upon apparent refusal 13, instituted instant suit Delaware, seeking preliminary injunction temporary restraining compel proceed no further maintain pending questions had been set. district issued pestraining kept effect successive orders enjoined issuing refrain After grant ground there shown basis relief 8 Third Circuit affirmed judgment 1(b) excluding 'the production gathering gas' Commission's jurisdiction left state regulation outside regulatory powers. 172 Reporter, 2nd Series 57. Corporation granted leave intervene opposition 9 To consider important applicability transaction, we certiorari. 336 935, 748. 10 Without entering upon another legislative history,2 suffice say Act did envisage federal entire field limit constitutional power. Rather contemplated exercise specified particularly segment states were powerless regulate Commerce Clause Constitution.3 complement bodies.4 Accordingly, Congress only prescribed intended reach power, but areas extend. provides follows: 11 '(b) shall apply transportation commerce, resale ultimate consumption domestic, commercial, industrial, other use, companies engaged such sale, local facilities used gas.' 12 'This section determines Act's coverage does so light situation existing time. Three things three drew own delegated agent, These were: (1) commerce; (2) resale; (3) sale.' versus Public Service Indiana, 332 507, 516, 68 190, 195, 92 128. moreover, expressly exempts coverage5 gas; distribution; (4) gas. 13 seeks distinguish activities gathering, drilling, spacing wells, collecting gas, facilities, therefor argues former excluded support position pointed out specifically both while makes mention gathering.6 face unambiguous language background, cannot ascribe narrow meaning words, Colorado Interstate 324 581, 603, 65 829, 839, 89 1206, phrase comprehended producing company. We now adhere clear words their obvious expression congressional intent.7 Of course essential production. cites §§ 5(b), 6(a) (b), 8(a), 9(a), 10(a), 14(b) 'to confer certain measure authority Commission' sections empower make investigations, prescribe rules keeping accounts records require file reports deemed necessary proper administration powers inquisitorial nature designed aid exercising recommending legislation Congress.' 14(b), quoted below, comes closest supporting argument confers obtain information.8 Although bear evidence consideration relationship elements business, do even implication suggest extension cover incidents supra, page 602, considering more described aids 'normal conventions' making. held rate-making could include fair value base primary duty fix just reasonable rates resale. For purpose permitted examine cost gathering. use data making precedent marketing. Before decision, bought producers would weighty factors rate-base method fixing used. Low valuation low-cost allowance purchased discourages exploration commerce.9 knew direct actual 16 urges 7(c) authorizes certificates convenience necessity those sale. It point Panhadle applications construct additional pipeline included here reserves, finding adequate warrant expansion.10 Moreover 'used useful property.' therefore, proposes dedicated discharge public-utility obligation render service nondiscriminatory rates. From circumstances, concludes relinquished implied protect function insure maintenance Sections 4, concern rather reference limited express terms. Thus 4(a), (c), 5(a) speak 'transportation 7(a) (b) refer respectively facilities' 'facilities Commission.'11 indicate swallow exceptions thus extend commerce. repetition 'subject jurisdiction' intent keep hands excepted matters. answer applies petitioner's gives stop sales leases.12 appropriate carry hardly taken rescind prohibition against actions. 17 leans heavily 7(b) abandon prior Commission.13 since 'lifeblood' system, disposing unhampered control, itself unable continue service; consequently abandonment result. begs question. like above, covers Commission.' 18 accept arguments springing allow service, rates, establish wide invite expansion phases forbidden area.14 assumption denied explained report floor Houses Congress.15 history Footnote 15--Continued. reported Committee Foreign Seventy-fourth Congress, second session, recommendation pass. If enacted, bill first time provide transporting selling use. have, course, many regulated consumers intrastate transactions. able though being considered character absence regulation. (See Pennsylvania (1920), 252 23 (40 279, 64 434).) There intention enacting disturb jurisdiction. However, case resale, so-called wholesale sales, (for example, distributing companies) different. Such transact ons and, Congressional action, Missouri (1924), 265 298 (44 544, 1027), (Utilities) Attleboro Steam & Electric (1927), 273 83 (47 294, 71 549).) basic occupy act. '* takes commissions, drawn manner usurp authority, contains cooperative action bodies. 'Your committee believes highly desirable fill gap exists reason lack commissions.' H.R.Rep.No.709, 75th Cong., 1st Sess., Pages 1—3. During debate House sponsor, Chairman Lea following explanatory statements: 19 'The regulation, cases where commissions interstate-commerce law. This nothing commissions; consumption. 20 81 Cong.Rec. 6721. 21 Likewise Senate, Wheeler gave similar interpretation Act: 22 'Mr. Austin. President, N Dec. Immigration Nationality Decisions ask Senator Montana (Mr. Wheeler) concerning bill? Does undertake gas? Wheeler. attempt distributors who 24 yield one inquiry? 25 Yes. 26 Is transportation? 27 Yes; affects wholesale. 28 King. information implications arise bill, what affect. As illustration, if Wyoming transported Senator's my Stat, activity? 29 No; let me that, matter fact, interfere way, shape form.' 9312. 30 Connally. true, utility commissioners advocate it, whenever agency activity authorities begin shift lose replete care states.16 probably occurred legislatures, interests conservation, broad elaborate bodies aspects gas.17 supplement produce harmonious comprehensive industry.18 Neither nor body encroach other.19 enacted full problems distribution. well national interest. mind. Legislative adjustments reconcile conflicting views. 31 found undisputed 'It practice industry trade freely never heretofore asserted transfers leases.' ten claimed dealings acreage. Failure long believe existed.20 extravagant, abstractly possible, mode push possible must reconciled symmetrical whole.21 attribute far-reaching implicit when endeavored precise explict defining limits power.22 32 enforce halting outcome investigation. using it. Injunctive requested 20(a)23 general equiry court. entitled judicial assistance, however, valid based statutory above related beyond sales. A stopped delay prevent.24 disposition authorized call fact.25 33 accordingly affirmed. 34 Affirmed. 35 MURPHY took decision case. 36 BLACK, whom DOUGLAS RUTLEDGE concur, dissenting. 37 Court's go far toward scuttling 'necessary interest' Government Many detailed perform acts, prescribe, issue, make, amend, orders, rules, regulations provisions' Today's interprets denying company's properties. deprives congressionally imposed 38 sterilizing rests exception appearing Act.1 That agree 'unambiguous' give 'clear meaning.' 'Production' mean act bringing forth earth, 'gathering' brought forth. natural' meanings attributed word symbols. Comm., 597 604, 837—840, 1206; 331 682, 689—691, 67 1482, 1486—1487, 91 1742. physical acts incident 'production gathering' gas—local activities—that decisions emphasized free regulate. Today reads privilege 'production' absolute bar ownership gas-reserve indispensable And limiting leaves impotent public's having disabling 'ineffective regulation,' directly opposed Ac 520, 196, 39 7(e) requires 'able willing properly conform requirements, thereunder 7(d), applicants market served.'2 denies 'abandon portion needed importance reserve appears 7(b), 7(e). Jurisdiction granting railroads tracks, routes, rights-of-way, etc. 635, 648—649, 827—828, 1241. 40 respondent fixed determined claim permits affiliate protest According allegations complaint already large sums money reflected expenses incurred maintaining development costs relation them. But holding today, properties, increased consumer contributions, away newly formed affiliate. continued 41 Furthermore costing $160,000, apparently capitalized respondent's affiliated 'purchaser' $10,000,000. original $160,000 cost. 648, 827, least doubtful today's prevented hereafter charging $10,000,000 inflated valuation. unwholesome practices primarily p event new lease life. evils aimed prevent technique retransfers parent corporations, offsprings affiliates. Comm. Hope Co., 320 591, 610, 281, 291, 88 333. 42 seems inconceivable passed neutralizing whole business depended. meaningless deceptive Congress. While grants effectively protecting services during life 43 regards Congress' his offspring swimming stern admonition near water. 44 reverse. Porter Warner Holding 328 395, 398, 66 S.ct. 1086, 1089, 90 1332; Yakus States, 321 414, 440, 660, 674, 834; Hecht Bowles, 321, 331, 587, 592, 754; Virginia R. System Federation, 300 515, 552, 57 601, 789; City Harrisonville W. S. Dickey Clay 289 334, 338, 53 77 1208. discussed opinions 514—521, 193—197, 128; 689—690, 1742; 601—603, 838—839, 609—613, 291 292, 333; Illinois Central 314 498, 506—508, 62 384, 387—388, 86 371. See H.R.Rep.No.2651, 74th 2d 1—3; 1—4; S.Rep.No.1162, Utilities Fuel 317 456, 467, 63 369, 375, 87 396; anhandle 517—518, 195—196, quoting exemption 1(b), says: actually necessary, matters therein covered affirmatively stating previous bills, than contention, however unfounded, elimination negative broaden act, bill.' Page 3. Actually, report, 'That declaration surplusage fact connection distribution, character.' brief prepared Solicitor constitutionality H.R. 11662, earlier substantially analysis bill: athering purely character, facilities.' Hearings subcommittee 17. testifying answered question: Cole (Member Committee). anywhere source different fields might comparable your hydro-electric generating plants? DeVane (Solicitor F.P.C.). not; no, business. is, deals that.' 34. may, hearing, adequacy inadequacy controlled anyone behalf, including owned leased royalty contracts; also, propriety reasonableness inclusion operating expenses, capital, surplus rentals forms rental compensation unoperated lands leases. determinations, true copies agreements respect reserves.' 7. 612, F.P.C. 546, 949, 952; Docket G—876, Order 598, 837, 1206. 'Sec. 16. *' No rendered permission obtained, due available depleted extent continuance unwarranted, future permit abandonment.' Would soon contended 7(a), acquisition allocation pipe lines interest? H.R.6586, became adopted change Senate bill. note 3, supra. excerpts pertinent: identical H.R.12680 responsibility? turn essentially country, superimposed necessarily governed Did happen railroads? doubt about entirely situation. involves anything except price 9313. Then, meet effort o central government acquire resources Montana, Vermont, State? Oh, yes. touch shape, form, furnishing information. great fear occult methods acquiring several States.' 9314. passage (H.R. 5711 S.1919, Sess.) introduced houses March 1937, provided 'this procurement transmission exchange, transmission, defined (Federal Power) exchange therewith parts operated State.' failed adoption; instead specific exemptions See, Gen.Stat., chapter 55, 701—713 (Supp.1947); Mich.Stat.Ann., 97, 13.138(1)—13.140(10) Okla.Stat.Ann., tit. 52, 81—247; Rev.Civ.Stat., 102, 6008 (Vernon, 1925, Supp.1948); La.Gen.Stat. 4766—4826.2. 396. 690, 1487, Trade Bunte Brothers, 312 349, 352, 61 580, 582, 85 881; Norwegian Nitrogen Products 288 315, 350, 358, 796. 5(b) reads: motion, request commission, prejudice efficient conduct affairs, investigate governing When read amendment House, amended inserting italicized words. Boren, member Fore gn Commerce, submitted Boren. Chairman, agreed committee. offer clearly arising 'During hearings statement: "Mr. observation challenge proponents subsection B growth influence bureau, realm wherein proposal submits acknowledgment responsibility rightfully exist.' clarifies governments, assures handle problem. approved amendment, say.' 6728. 20. (a) Whenever appear person engage constitute violation rule, thereunder, discretion bring Columbia, courts Territory place enjoin compliance Cf. 468, analogous institution litigation, uncertainty independent gatherers Investigation (Docket G—580), transmitted 28, IV subscribed Commissioners Smith Wimberly, concluded 40: 'No conclusion although 'activities' exempt arm's length transport regulated. Unless distinction disclaimed, doubts uncertainties ontinue felt expressed regarding gather then others commerce.' Pp. 38—39. 'In view unsettled matter, desirable, recommended, adopt amendatory thereof lines, confirm 1938.' 40—41. Draper Olds, 12—14. giving H.R.79, H.R.1758, H.R.982, S.1498, S.1831, 81st thereon. relies 'finding fact' 'asserted majority views 'finding' existed.' affidavits offered motion utilized prop Moreover, points trading place. 'does reflect picture. Until time, blocking improving presently aware, achieve results derogate jurisdiction.' 57.5(f) 99 (7 Fed.Reg. 6844).

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