Legal Document

372 U.S. 84 83 Supreme Court Reporter 646 9 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 601 NORTHERN NATURAL GAS COMPANY, Appellant,v.STATE CORPORATION COMMISSION of the State OF KANSAS. Number 62. Argued Dec. 13, 1962. Decided Feb. 18, 1963. Rehearing Denied April 1, See 960, 1011. [The balance this page intenionally left blank] Mark or Haw. Hawai‘i KFH45 A2 Adams, Sr., Wichita, Kan., for appellant. Charles C. McCarter, appellee. Mr. Justice BRENNAN delivered opinion Court. 1 The question in case is whether orders Kansas Corporation Commission which require appellant, an interstate pipeline company, to purchase gas ratably from all wells connecting with its system each field within State1 invalidly encroach upon exclusive regulatory jurisdiction Federal Power conferred by Natural Gas Act, 15 Code KF62 §§ 717—717w. 2 appellant's connected some 1,100 natural Hugoton Field2 under about 125 contracts between appellant and various producers. have been duly filed Commission. Under oldest contract, known as Republic 'A' was made 1945 Company, still force modified 1953, obligated up maximum production allowables Republic's system.3 Appellant's other producers provide that commitments thereunder are expressly subject agreement Republic. Thus bound only so much requirements were not satisfied quantities contract required be taken wells. 3 until 1958 such purchases nevertheless roughly ratable, is, like proportion legally fixed Field. However, after aggregated substantially less than total wells.4 requirements, contractually wells, resulted proportions below those producers' This imbalance brought complains. 4 A statute5 empowers 'regulate taking any * common sources supply state prevent inequitable unfair source unreasonable discrimination favor against producer supply.' adopted 1944, avowedly a conservation measure, basic proration order designed effect ratable protect correlative rights Field.6 In 1959, take no higher producers, entered specifically directing That superseded February 1960 general order, directed at purchasers gas. These presented alternatives complying obligations increasing takes wells—thus more it could currently use—or risking liability breach decreasing allowables.7 5 Appellant challenged two courts on ground, among others, they unconstitutionally invaded Act. sustained orders, 188 Kan. 351, 355, 362 Pacific Reporter, 2nd 609, 599; rehearing, 624, 364 668. We noted probable appeal Court, 370 901, 82 1248, 8 399. disagree we hold Commission's did invade Act has over sale transportation commerce resale. I. 6 consider first ground relied constitute regulation 'production gathering' gas, exempted federal domain terms § 1(b) 717(b). do regulate exemption. line decisions beginning Colorado Interstate company versus Comm'n, 324 581, 598, 65 829, 837, 89 L.Ed. 1206, 331 682, 689—693, 67 1482, 1486—1488, 91 1742, consistently held 'production' 'gathering' narrowly confined physical acts drawing earth preparing stages distribution. Phillips Petroleum Wisconsin, 347 672, 680—681, 74 794, 797—798, 98 1035; Continental Oil Cir., 266 208; Huber 236 550. but purchaser none activities shown record involves gathering, sense used *'8 supra, 678, 797. II. 7 also neither threatened actual invasion since 'in way price gas.'188 P.2d, It true settled even before passage direct prices wholesales beyond constitutional power States—whether framed achieve ends, conservation, ordinarily ambit power. Missouri ex rel. Barrett Co., 265 298, 44 544, 68 1027; cf. Public Utilities commission Attleboro Steam & Electric 273 83, 47 294, 71 549. But our inquiry end because deal volumes purchases, Dayton-Goose Creek R. States, 263 456, 478, 169, 172, 388. precludes merely contractual matters. Illinois Central Service 314 498, 506—509, 62 384, 387—388, 86 371. Congress enacted comprehensive scheme 'all commerce, occurring before, during, transmission company.'9 799; see H.R.Rep. 709, 75th Cong., 1st Sess. 2. leaves room either Pipeline Panoma Corp., 349 44, 75 576, 99 866, regulations would indirectly same result.10 necessarily matters directly affect ability comprehensively effectively uniformity objective They therefore agency's domain. danger interference arises these unmistakably unambiguously who resale commerce. effect, shift shoulders burden performing complex task balancing output thousands State, Miller Bros. Maryland, 340, 535, 744—a otherwise presumably Commission's. Moreover, readjustment purchasing patterns might previously took unratably seriously impair authority intricate relationship purchasers' cost structures eventual costs wholesale customers sell consumers States. matter respect given paramount authority. Hope 320 591, 610, 64 281, 291, 88 333. prospect area acute fact criminal sanctions imposed statute noncompliance fall local Therefore, although collision may inevitable consequence, there lurks imminent possibility purposely must declared nullity assure effectuation ordained Congress. 10 true, urges, accommodation part avoid collision—but argument misses point. Not subordinated, when plainly occupied field. Cf. San Diego Building Trades Council, etc. Garmon, 359 236, 79 773, 775. already said asked 'whether can practicably and, if find cannot, then impelled decide governs.' Transcontinental Pipe Line 365 19—20, 81 435, 445, 377. III. 11 Appellee's principal contention, essential traditionally function There doubt possess allocate conserve scarce resources beneath their lands. recognized particular Patterson Stanolind 305 376, 59 259, 231; Bandini Superior 284 8, 52 103, 76 136; Walls Midland Carbon 254 300, 41 118, 276. problem existence scope State's resources; Constitution means chosen exercise conceded threaten scheme. 12 purpose, however legitimate, resources, does warrant Cities 355 391, 78 381, 355; Michigan Wisconsin 425, 409, 412. suggested variance Champlin Refining 286 210, 559, 1062, further challenge Commerce Clause.11 reject suggestion. carefully limited holding which, observed precisely, 'apply sales crude oil products.' (Italics supplied.) noted, '(s)uch essentially mining operation *.' U.S., 235, S.Ct., 565. And, enactment confirming objectives, care say, '(t)hese ends justify control though uses property profitably put restricted.' Peerless 340 185—186, 219. cases significant distinction, bears consequences, measures aimed resale, production. former cannot threaten, here, achievement regulation. 13 Of course, method us fail, reasons given, Kansas' attaining ends. not, however, appear without alternative checking waste disproportionate discriminatory taking.12 invalidation form result 'gap' sort prevent. 682—683, 799. For example, very recently should appropriate account certain factors certification proceedings. 20—22, 445—446. McGrath, Regulation Producers Relation Conservation Gas, Geo.L.J. 676 (1956). IV. 14 Although what answers decision, comment suggestion advanced both amicus curiae. hold, jurisdiction, judgment reversed rather remanded theory might, light holding, now effected modification permit performance through takings lower amounts necessary ratability short, court, afforded opportunity, harmonize measurable transmissions sales. several reasons. First, opinions show court clearly substantiality asserted encroachment squarely decided validity orders. Neither rests independent nonfederal Commission, suggesting remand, concede much. Nor undecided aspect sustain ground. Indiana Anderson Brand, 303 95, 58 443, 685. complete avoided. hardly seemly ask reconsider reached different conclusion question. 16 Furthermore difficulty perceiving how properly invite interpret view possible abatement issue lawsuit—indeed, party; controversy solely concerns To consideration invalid trespass area, one things: (1) determine accommodated absence contracting parties; (2) vacate domain, abstain deciding pending decision action pit circumstances, follow remand highly irregular. 17 event misconceives nature called decide. arise immediate conflict regulations. stand face pervasive occupation 241—244, 777—779. Indeed, had actually lawsuit, mere make question, determined jeopardize Act's uniformity. 28, 449. For, avoided postoponed just short collision, ad hoc every vary accordance kaleidoscopic variations law. 18 judgments causes proceedings inconsistent opinion. 19 Reversed remanded. 20 WHITE case. 21 HARLAN, whom STEWART GOLDBERG join, dissenting. 22 'ratable take' virtue combined minimum 'take pay' provisions Northern's consumer sold will forced up, thereby potentially embarrassing effective prices.1 premise alleged course remain unaffected 23 appellee says correct nonetheless valid. amicus, while denying conclusion, says, abrogate pay contained suggests determination obviate necessity time questions 24 Without intimating questions,2 seems me obviously sensible one. Northern 172 450, 241 708. Court's opinion, N Immigration Nationality Decisions understand it, gives three refusing remand: per se bear gas; longer quantity readjust patterns, ultimate prices; (3) apart that, 'highly irregular' course. little nothing objections remand. 25 allowed obscure nature. movement into channels operation. limiting volume well tantamount limitation well. Indeed seem most feasible providing taking, alone first-hand knowledge his connections ratable.3 An addressed simply requiring produce others whose unfamiliar create obvious administrative problems.4 26 thus concluding read 'purchaser' 'producer' attempt Their purpose limit production—the act earth. extent, then, operations produced, involve (the) 1(b)' exemption 797, 1035. 27 regardless applicable areas reserved authority.5 itself, interfere functions (§ Act) rate (§§ Act).6 And hard reconcile score statement 'conservation regulation.' Page 94. (Emphasis added.) As (pp. 103—106), threat, exists case, flowing valid measures. 28 itself acknowledges release entail states: 'In event, despite companies urge impinged national, opposed local, concern, interfered purposes supremacy clause.'7 discussed, think perfectly sound position. 29 unnecessary if, view, deemed contract. remote adverse falls far establishing invalidity. 30 here intended measures8—to preventing drainage underproduced overproduced wells.9 always resource expense others. See, e.g., Lindsley Carbonic 220 61, 31 337, 55 369; Ohio Indiana, 177 190, 729. difficult imagine carry affecting incurred Regulations casing prohibiting use pumps, restricting percent well's 'open flow,' imposing gasoil ratio, controlling drilling pressure, prescribing permissible spacing enforcing pooling unitization reduce amount available (at least run) buy someone else probably greater cost. Yet never reason invalid. availability 'allowable' order. places ceiling produced during period inevitably makes pipelines spread demand many Obviously precisely caused measure; disadvantage 32 1062 (1932), sustained, Clause, allowable Since passed, considered withdraw it. dispute 1938 intend deprive powers Constitution. Rather, fill 'gap thought exist passed' aspects business believed constitutionally incapable regulating. 684, 685—687, 800—801, stated House Committee Report, 'takes commissions, drawn complement manner usurp authority.' Sess., 2.10 33 If valid, distinction present case? points difference structure, Pages 100—102, illusory. 34 Quite ramifications facts demonstrate folly determining basis possibilities unsupported specific data. paying liability, over-all likelihood decrease. Surely beneficial structure knowing extent purchasers. lurking fears completely nonexistent. insecure foundation builds rule applied, destroy name preserve existing powers. 35 remaining arguments equally unsatisfactory. 36 rest (the abrogation, contract), questions. Whatever prompted course—perhaps desire obtain broad mistaken belief irrelevancy questioned—this surely constrict grounds adjudication familiar practice refuse reach predicated decision. enough refer landmark concurring Brandeis Ashwander Tennessee Valley Authority, 297 288, 346—348, 56 466, 482—483, 80 688, enumerating principles tenet strictly adhered. 37 said, step suit Company party litigation. germaneness premises apparent. presumed procedures vouching informed another Northern, party, continuing contract.11 Hence, necessary, hand resolution 38 why law dispose done comparable instances. Leiter Minerals, Inc., 352 220, 228—230, 77 287, 292—293, 267; Aquilino 363 509, 515—516, 1277, 1281, 1365. 39 determination, procedures, Northern-Republic embodied Rule 82—2—219, provided: RATABLE PRODUCTION FROM COMMON SOURCE SUPPLY shall maintain proportionate status overproduction underproduction; provided, apply results inability proportionately (Authorized G.S.1959, Supp. 55—703; Effective 1960).' generally October 7, ' Field.' When promulgated, rescinded. force. merits, survived, superseding history discovery development Field, earlier efforts insure in, from, field, American Bar Association Section Mineral Law, Gas—A Legal History, 1948 (1949), 165—183. original amended, minimum-take percentage needs district served 1952 term exceed set stipulated Man. substantial underages attributed factors: increase exceeded increases Field; second, projected expansion delayed unexpectedly failure secure requisite certificates convenience factor material appeal. statute, amended Kan.Gen.Stat., 1949 (Supp.1959), 55—703, captioned 'Production regulations; rules formulas.' speak 'taking' 'purchasing' decreed synonymous. dissenting judge below, comprehended nowhere defined referred lacked 365, 599, 606. operative clause designated guide 'the gas' No enforceable purchasers, section admonished, '* well, endeavor schedule Pending trial suits recover damages contracts. need ratable-take exclusively contrasting views compare Kelly, Proration Ratable Taking Texas, Tex.Bar Judge 763, 797 (1956), Comment, S.W.L.J. 358, 360—361 (1957). Persistent narrow broader unavailing. inter alia, H.R. 4051, 80th Sess.; 4099, 1758, 81st S. 1498, 'Attempts weaken protection (of exploitation hands natural-gas companies) amendatory legislation exempting repeatedly failed, strained interpretation statutory language.' 685, 801. Our 179, 215, 95 Oklahoma, 221, 204, contrary. dealing construction Act.' 45, 576. Resources (1960), 342. 602—603, 839; supra. alternatives, particularly similar discussed. member Byrd, Contractual Property Rights Affected Laws Regulations, Tenth Annual Institute Law Taxation, 6—7 (1959); 170—171; Kulp, (1954), 10.100; Kuntz, Treatise (1962), 4.7. urged practical restrictions easily First Amendment Summers, 139 n. 9.30. On contrary, argued objectives sought achieved 359, note too witness proceeding herein decrease 33. apparently obligation pursue federally protected Dean Milk Madison, 349, 354—356, 295, 297—298, 329. occasion tainted improper motive, disadvantageous Texas share Field Kansas. relevancy motive questioned. Stephenson Binford, 287 251, 276, 53 181, 188, 288. Thompson Consolidated 300 55, 69—70, 57 364, 371, 510, where invalidated 'shown reasonable relation prevention effects, claimed summarized appellee's brief (p. 26) follows: 'To comply argued, become continue whole reallocate them figure provided contended courses want market fields incur fields, second Either cause consumer, At Term dismissed presenting decides today. Permian Basin Railroad 358 37, 21, 43 (reported Tex.Civ.App., 302 South Western 238; Jurisdictional Statement 64, Oct. Term, 1958). Most important producing long statutes rights. Tex.Stat.Ann., Tit. 102, Article 6049a, 8a (enacted 1931); Okla.Stat.Ann., 52, 240 1915); La.Rev.Stat., 1950, 30, 41—46 1918). circumstances situation attempted impose foreign corporation, doing collection tax goods purchased residents taxing store corporation located domicile. 744. relieve mathematical computation involved distributing State. 439, 377: Congress, enacting give incident production, sale. 'meticulous' invest leaving residue penalties adds Memorandum curiae, 21—22. disclaims contention Oklahoma 94—95, 12). pool produces large pressure reduced point; tends flow toward low point, reducing Panhandle Eastern 332 507, 517, 195, 92 128 ('The extending regulation, cut down power'); 337 502—503, 512—513, 69 1251, 1254—1255, 1259—1260, 93 1499; 690, 1487, 1742. Nos. 4165 4235, District Stevens County, Kansas, told, claims observe

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