Legal Document

347 U.S. 672 74 Supreme Court Reporter 794 98 L.Ed. 1035 PHILLIPS PETROLEUM CO.v.STATE OF WISCONSIN et al. STATE TEXAS versus FEDERAL POWER COMMISSION Nos. 280, 281, 418. Argued April 6, 7, 1954. Decided June [Syllabus from pages 672-673 intentionally omitted] Mr. Solicitor General Simon E. Sobeloff, Washington, D.C., for petitioner Federal Power Commission. Hugh baron Cox, Phillips Petroleum co. Dan Moody, Austin, Tex., State of Texas and others. Messrs. Stewart G. Honeck, Wm. Torkelson, Madison, Wis., Charles S. Rhyne, James or Haw. Hawai‘i Reports KFH45 A2 Lee, Harry Slater, respondents. Justice MINTON delivered the opinion Court. 1 These cases present a common question concerning jurisdiction Commission over rates charged by natural-gas producer gatherer in sale interstate commerce such gas resale. All three are an outgrowth same proceeding before involve facts issues. 2 The Company1 is large integrated oil company which also engages production, gethering, processing, natural gas. We here concerned only with operations. known as 'independent' that it does not engage transmission producing fields to consumer markets affiliated any pipeline company. As revealed record us, however, sell five companies transport resell consumers local distributing fourteen states. 3 Approximately 50% this produced Phillips, remainder purchased other producers. A substantial part casinghead gas—i.e., connection production oil. flows wells, most instances at well pressure, through network converging pipelines progressively larger size one twelve processing plants, where extractable products impurities removed. Of nine networks involved these cases, located entirely Texas, Oklahoma, New Mexico, two extend into both Oklahoma. After completed, plant outlet pipe, varying lengths up few hundred feet, delivery point sold then continues its flow system until 4 Commission, on October 28, 1948, instituted investigation determine whether within and, if so, unjust unreasonable. In extensive hearings examiner, described above were developed, much additional information. An intermediate decision having been dispensed with, issued order held 'natural-gas company' meaning term used Natural Gas Act,2 therefore Commission's rates.3 Consequently, did proceed investigate reasonableness Phillips. On appeals, was reversed Appeals District Columbia, judge dissenting. 92 U.S.App.D.C. 284, 205 Reporter, 2nd Series 706. granted certiorari. 346 934—935, 374—376. 5 authorized § Act regulate 'rates charges made, demanded, received transportation subject * *.' 'Natural-gas defined 2(6) mean 'a person engaged commerce, resale.' set forth 1(b) follows: 6 'The provisions shall apply resale ultimate public consumption domestic, commercial, industrial, use, sale, but distribution facilities gathering gas.' Petitioners admit 'the resale', as, course, they must. Interstate 331 682, 687—689, 67 1482, 1485—1487, 91 1742; cf. Michigan-Wisconsin Pipe Line Calvert, 157, 166 168, 396, 401—403. They contend, affirmative grant sales first clause limited negative second section. particular, contention made 'production gas' expressly extend. 7 do agree. our view, statutory language, pertinent legislative history, past decisions all support conclusion Act, regulation 8 found Phillips' process, 'at least exempt incident thereof.'4 This determination appears have based primarily reading history interpretation certain Also, there some testimony effect 'gathering' commonly accepted industry comprehends physical activity collecting contend finding has reasonable basis law supported evidence should be courts, particularly since 'consistently' interpreted conferring Phillips.5 See Gray Powell, 314 402, 62 326, 86 301; National Labor Relations Board Hearst Publications, Inc., 322 111, 64 851, 88 1170. opinion, without adequate law, gathering, sense those terms 1(b), end occur. 9 Panhandle Eastern Co., 337 498, 505, 69 1251, 1256, 93 1499, we observed 'natural clear meaning' phrase encompasses properties company.' Similarly, Colorado 324 581, 598, 65 829, 837, 89 1206, stated '(t)ransportation include gathering', indicated gathering' exemption applies activities, facilities, Id., 602—603, page 839. Hope 320 591, 612—615, 292—294, 333; Peoples 75 235, 127 153; United States Public Utilities 345 295, 307—311, 73 706, 713 716, 97 1020.6 10 Even more directly 1742. Company turn companies, activities occurring state. noted '(e)xceptions primary section (1(b)) strictly construed',7 id., 690—691, Statutes-at-Large 1487, conferred stating: 11 'Petitioner asserts pipe line process consequently power regulation. basic given rise great many subsidiary questions petitioner's lines transmission' continued points was, found, completed prior surrender custody passage title. unnecessary resolve moved consisted wells commingled gathered introduced during course movement. By time consummated, nothing further remains done. commerce. It cannot doubted their predominantly matter national, contrasted concern. transactions destined than Louisiana. Unreasonable exacted stage movement become perpetuated fixed items costs must covered subsequent purchasers including consumer. avoid situations passed.' 692—693, 1488. 12 attempt distinguish case grounds transported after completion sake, event. Court, refused rely refinements8 instead broader ground producers come exemption. 13 said distinguishable asserted conflict state regulation, federal control opposed authorities, while instant conflicting regulations, vigorously short answer intended vary state, depending upon degree opposition control. rejected implication contrary, case. U.S., 691—692, 1487—1488. supra, 607—615, 290—294. 14 discussed supply ready petitioners' suggestion construed 'business' product considered integral 'business.' see no reason depart previous decisions, especially consistent language Act. 15 general, petitioners Congress alleged excesses evil brought about legislation. If case, difficulty perceiving why disjunctive. would sufficed give 'transportation' 'transportation resale' covered.9 East Ohio 338 464, 468, 70 266, 268, 94 268. 16 Rather, believe indicates congressional intent wholesales before, during, company.10 There can dispute overriding purpose plug 'gap' resulting judicial prohibiting, constitutional grounds, aspects business.11 significant gap created cases12 holding wholesale electrical energy moving beyond powers States.' 689, 1487. committee reports bill became specifically referred necessity occupy hiatus them.13 Thus, satisfied sought ends systems. 17 cite recent Cities Service Peerless Oil & 340 179, 71 215, 95 190, 221, 204, authority proposition states may hence, fill. Those upheld minimum price orders, justified conservation measures, applying But settled thought exist passed, affected somewhat loosened restrictions affecting absence Illinois Central 508, 384, 388, 371; 472. 270. participate appellants assert possible under consider '(w)hether authorizes field prices independent producers, leaves function 188—189, 221. 18 Regulation so-called essentially different when affiliate direct paid consumers. Protection against exploitation hands aim 610, 291. Attempts weaken protection amendatory legislation exempting repeatedly failed,14 refuse achieve result strained existing language. 19 judgment affirmed. 20 Affirmed. 21 JACKSON took consideration cases. 22 FRANKFURTER, concurring. 23 While N Dec. Immigration Nationality Decisions join leading Court's me so decisive deem appropriate emphasis. 24 Section face. comes us authoritative gloss. construe though had, words, added text following: 25 'However, resale, 'wholesale sales,' character constitutionally (see Missouri Kansas (Natural) 265 298 (44 544), Attleboro Steam Electric 273 83 (47 294)) act.' 26 read interpolation because committees responsible designed cover cited outside competence H.R.Rep.No. 709, 75th Cong., 1st Sess. 1—2; S.Rep.No. 1162, 2.* 27 To sure, excluded business piping another; electric current boundary another State. States. fact—that itself State—does slightest alter applicability doctrine situation us. fact continuous connecting transmitting change transaction. For reason, Attleboro, 86, 47 relying Pennsylvania, 270 550, 46 371, 726, barred 28 problem came today, laid down compelling. immaterial. leave wrote taken left fluctuation adjudications Commerce Clause. 29 DOUGLAS, 30 mouth 1938. never decided. indeed reserved 690, note 18, 31 national view regulating pipelines. unquestioned. Whether 1938 political legal controversy reged years. free doubts. makes regulatory applicable 'to consumption', them inapplicable "to gas." 32 'sale resale'. "the gas", Clark his phase process. So make choice; choice easy one. 33 helpful. pipelines, thoughtful Comment 59 Yale L.J. 1468 out. Trade preceded (S.Doc.No. 92, Pt. 84—A, 70th Sess.), debates bills evolved little need filled regulation—sales distributors along demonstrates. 34 That followed heels Columbian Fuel Corp., F.P.C. 200, 207. exempted whom material respects comparable. men intimately familiar background Act—Leland. Olds, Basil Manly, Claude L. Draper, Clyde Seavey. One Commissioner, John W. Scott, dissented. construction persisted Billings 288; Fin-Ker Production 92; Tennessee Transmission 98) 246. 35 contemporaneous, American Trucking Ass'ns, 310 534, 539, 60 1059, 1061, 84 1345 long continued, 513, 1260, entitled weight. Other obtuse less entrusted administrative agency Shields Utah Idaho R. 305 177, 160, 111; Sunshine Anthracite Coal Adkins, 381, 907, 1263; 301. 36 practical considerations buttress position lead conclude reverse regulated, rate base properties; supervision operating expenses necessarily includes expenses. extended far owned properties. And had be, own supplies effective. understanding what entails fastening brings effective control, spite profound. determines he able willing pay (if buys wells). profits. profits gatherers, whose moves profound effects methods old new ones explored, etc. Regulating regulates vital way regulated. largely nullifies Congress. 37 policy Commissioner who dissented ruled sales. it. taken, battle won Congress, here. involves know competent deal. 38 CLARK, BURTON concurs, 39 Perhaps included among gave do. provided 'shall Language could express clearer command, majority renders almost nugatory wholly regulated Nor stop there, sweep 799, supra. (Emphasis supplied.) face, every operator, smallest largest pipeline, doing, acts contrary intention states, itself. thereby thrust domain traditionally 40 industry, like ancient Gaul, divided parts. parts companies. unit perform functions—typically, addition transmission. operations confined exclusively part—production gathering. highpressure trunk companies; not, distribute Its systems merely bring producers' central plants rendered usable fuel. Since storage, amount gas, casinghead,** each day depends day-to-day demands depend weather conditions consuming areas. cut off market demand requires. Gathering takes place pressure forcing numerous small pipes station. 'header' processed use necessary remove hydrocarbons, hydrogen sulphide foreign elements permit operates producing. operations, acreage produce themselves, connect run plant, form closely knit involved. immediately long-term contracts. 41 '(t)hough technically consummated (by pipelines) 'during gathering," 'are connected incidents (production gathering) render inconsistent interference exercise functions.' correct approved 42 doubt saved Act's removes Dozier DeVane, predecessor finally testified 'that field.' Hearings Subcommittee Committee Foreign H.R. 11662, 74th 2d Sess., Page (1937). bill, said, 'does business.' 34. also, 42—43. DeVane 'substantially similar Act,' views treated 1949, 1499. 1950, 472, 271, 12, face adherence ever subject, 200 (1940), 288 specific refuting views, today erroneously finds DeVane's 'testimony relevance here.' 9, 43 close barring refers decisions: ex rel. Barrett 1924, 298, 44 544, 68 1027; 1927, 83, 294, 549. Pages 1—2 independent, unintegrated, unaffiliated Neither gathering; electricity; House Report, 1—2, expressed alim 'sales companies,' thereafter Report's unmistakable reference 'producer-pipeline' distributor. refer because, first, sells secondly, independents. aimed abuses unintegrated final report Senate malpractices industry. S.Doc. Number (1935). stimulus intervention outlined powerless prevent; monopolistically situated gouged charging unreasonable rates. find abusive pricing gatherers; anything, independents likewise victims monopolistic practices certainly 1944, 291, 333, gas" protect interests operator.' 612—613, 614, 292, 293. Five years later, approval inclusion cost latter's 'is precedent marketing.' 506, 1257. 45 today's decision, restricts properties' Such gloss strips words substance. intended, mass empty vacant thousands hollow scarecrow derricks, monuments extension power. understood. now enforcing laws covering pricing, proration ratable taking, unitization fields, priority gases, spacing, repressuring, abandonment marginal area development, devices. Everyone fully aware relationship conservation. 507, producer's gatherer's 190; 204. doubt, will collide substantially interfere hinder enforcement measures. square Report subsequently enacted drawn complement manner usurp authority.' H.R.Rep.No.709, 801. heavily 1947, 1742, position. seesm govern materially situation. already operations; sold. addition, emphasized claim made. Indeed, successfully resisted attempts regulate. Hence possibility case; either remained unregulated. perhaps factual distinction reasoning rests total volume sold, roughly 42% others enough needs 42%, processed, Interstate's branch, trunk, main lines. short, equivalent middleman between gatherers performed transporting performs function. late Chief Vinson that: 'We validity jurisdictional tests employed (Columbian Billings, supra).' 18. established declining difficult how look guidance, better focus following Justice: 48 'Clearly, thus terests legitimate full freedom matters. sales, functions, attach.' 49 cursory examination reveals completely incidental Moreover, means inevitable clash complex action, pricing. matters obviously patterned quotation. import attach' 50 Jackson, observance good faith requires interpret represented urged enactment, read, have, declared it, viz. supplement supplant regulation.' 490, 280. Hereinafter 52 821, amended Code KF62 717 seq., Annotated KF65 U5 seq. concurred 246, 278. consistency regard questioned. Compare: 416; Brief Cir., 156 949, Order 139, Fed.Reg. 5585, 154, 4633. Scanlan, Administrative Abnegation Face Congressional Coercion: Affair, Notre Dame Law. 173; Note, 1468, 1479—1484. And, matter, even error still error. Referring taking purchasing recently 'gathering ordinary usage 164, 400. 6586, reveal limit contemplated. quoting exemptive quoted actually necessary, specified therein fairly affirmatively stating bills, rather invite contention, however unfounded, elimination broaden scope act, bill.' 3. adopted reprinted bill. S.Rep.No.1162, Despite decision. Just wording suggested considering enactment Chairman York Department Service, 4008, 146—147. earlier mains Much advanced developed Atlantic Because provision provided, 'for public.' 'naturalgas defined, 2(5), Association Railroad Commissioners changed identical contained proposed changes, commented 'Another intercompany wholesale, corporation 22. 141—143. 472—473, 270—272, 268; 502 504, 1254—1256, 1499; 332 514—521, 193—198, 128; 689—693, 1486—1488, 599—600, 837—838, 1206; 609—610, 506—508, 387—388, 371. Rhode Island 549; Corporation Wichita 290 561, 54 321, 78 500. Cf. Dahnke-Walker Milling Bondurant, 257 282, 106, 66 239; Lemke Farmers' Grain Embden, N.D., 258 50, 244, 458; Shafer Farmers 268 189, 481, 909. Jersey Light 319 61, 69, 63 953, 957, 87 1258. intrastate transactions. being prohibition enacting disturb jurisdiction. However, (for example, companies) different. (See (1924), (1927), 294).) 1—2. Among Congresses restrict are: 4051, 80th Sess.; 4099, 1758, 81st 1498, Pennsylvania (Second Dist. York) (1920), 252 (40 279, 434).) character, ** Casinghead furnishes latter surface. shut closing produced, regardless demand, recovery available flared (burned). one-third available. Sound practice dictates that, whenever possible, casing-head satisfy turned on.

Classification Label: 7