Court Opinion

ID: 9422061
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:01:03.89285+00
Date Added: 2024-06-11T17:22:34.042962
License: Public Domain

Mr. Justice Harlan,
whom Mr. Justice ,Frankfurter, Mr. Justice Whittaker, and Mr. Justice Stewart join,
dissenting.*
The basic issue presented by these two cases is essentially this: When an independent producer of natural gas enters into a contract for the sale of his gas in interstate commerce for resale, and seeks a certificate from the Federal Power Commission to carry out that contract, *160may the Commission issue a certificate of unlimited duration not limited to the term of the contract, in the absence of a special showing that the public convenience and necessity require the certificate to be perpetual? In holding that it may, I believe the Court has strained the provisions of the Natural Gas Act beyond permissible limits in order to reach a result which it deems more appropriate • to effective regulation. In my opinion, neither will the Act bear the meaning the Court attributes to it, nor will a contrary interpretation bring about the practical evils which the Court imagines.
I.
In my view the Court’s conclusions are attributable at bottom to its failure to take into account the basic distinction between an interstate pipeline and an independent producer of natural gas. A pipeline performs a service akin to those traditionally performed by public utilities: The independent producer, on the other hand, is unique among the objects of public-utility regulation because it is not engaged in rendering a service to the public in the conventional sense of that concept, but rather simply in selling a commodity which it owns. The Court’s basic error, it seems to me, is its notion that the petitioners are rendering a continuing service to the public in the same sense as a pipeline or other conventional utility, to which the usual modes of utility regulation are equally applicable.
I think that the Natural Gas Act, particularly as construed by the Court in Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672, recognizes this important distinction. The basic jurisdictional framework of the Natural Gas Act is found in § 1 (b) which provides:
“The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, *161to the sale in interstate commerce of natural gas for resale . . . , and to natural-gas companies engaged in such transportation or sale, but shall not apply to . . . the production or gathering of natural gas.” (Emphasis added.)
In Phillips the application of this provision to independent producers, such as the petitioners in these cases, was considered. Phillips there contended that it was not subject to the Act because it did not engage in the interstate transmission of gas and was not affiliated with any interstate pipeline company, and that to regulate its prices would be to control the “production or gathering” of natural gas, which is specifically exempted by § 1 (b). The Court rejected that argument, holding that Phillips’ sales, which were unquestionably made “in interstate commerce . . . for resale,” were subject to the Commission’s jurisdiction. It recognized that the Act creates two separate and distinct bases of jurisdiction — transportation and sale; that an independent producer engages solely in the latter; and that because of the production and gathering exemption, it is only the act of sale itself, which occurs at the very end of the production and gathering process, to which the Commission’s jurisdiction attaches. It is thus evident that the Court recognized that, as to independent producers, the Act envisaged only a limited scheme of regulation, namely control over the prices and the other terms of sale of their natural gas. The blurring of this distinction respecting the scope of the regulatory scheme of the Act as between independent producers and others can only lead to confusion when, as here, the Court is faced with deciding the proper scope of the operative provisions of the statute.
The operative provisions of the Act consistently reflect their more limited reach as regards independent producers *162than with respect to others. Section 7 (c) requires certification in order to
“engage in the transportation or sale of natural gas, subject to the jurisdiction of the Commission, or undertake the construction or extension of any facilities therefor, or acquire or operate any such facilities or extensions thereof . . . .”
Thus three distinct categories of jurisdictional acts are subject to certification: (1) transportation, (2) sale, and (3) maintenance of jurisdictional facilities. A pipeline must necessarily secure authorization for both transportation and maintenance of jurisdictional facilities, acts which by their nature are continuing services. But I do not understand the Court to contend that petitioners, as independent producers, have engaged in any jurisdictional act other than a sale.
The word “sale,” in its ordinary sense, signifies a transaction limited in duration and amount. Section 7 (c) requires certification of a sale, and there is nothing in the Act which suggests that the certification is to be broader than the jurisdictional act which it authorizes. On the contrary, § 7 (e), infra, p. 163, directs the Commission to issue a certificate authorizing “the . . . sale . . . covered by the application.” The Court suggests that a perpetual certificate does in fact authorize the specific sale proposed, and that to say that the Commission can authorize no more than that is to “load” the statutory language with a negative implication which was never intended. However, authorizing a producer to sell in perpetuity is certainly something different from authorizing him to make a specific sale. It could hardly be contended that a statutory direction to the Commission to authorize “the . . . sale . . . covered by the application” permits it to authorize some different sale.
*163The Court’s assumption that a perpetual certificate authorizes nothing different than what the producer has in effect applied for can in the end be justified only by its view, alluded to before, that what is involved is not a “sale” at all, but a “service” consisting of the perpetual movement of gas in interstate commerce. However, as already mentioned, this flouts the industrial realities. The independent producer does not perform a service; he owns and sells a commodity. Since he need not dedicate his gas supply to the interstate market at all, surely he may propose the amount he will dedicate. The Commission of course need not accept the proposal. But neither can it in effect require acceptance of a certificate authorizing something more, on pain of denying the applicant any certificate, without satisfying the requirements of § 7 (e), infra, for the imposition of conditions on certificates.
The Court, however, purports to find support in the statute for its notion that a sale is really a perpetual service. It relies primarily on § 7 (e), which provides in relevant part that
“a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extension, or acquisition covered by the application, if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed, . . . and that the proposed service, sale, operation, construction, extension, or acquisition . . . will be required by the . . . public convenience and necessity . . . .” (Emphasis added.)
It would appear plain from the face of the very language quoted that, while the word “service” is used, it is used disjunctively with “sale” and several other words, so that a sale and a service are simply two different, and not *164synonymous, things the Commission is authorized to certificate. However, the Court reasons that “service” must refer back to “transportation or sale,” for which § 7 (c) requires a certificate. But § 7 (c) requires a certificate for three separate categories of jurisdictional acts— transportation, sale, and maintenance of facilities. And §7 (e), concededly referring back to those categories, lists six items — operation, sale, service, construction, extension, and acquisition. Why the term “service” in § 7 (e) should be thought to refer to “sale,” the least apt of the three categories in § 7 (c) which it could describe, when it is immediately preceded in § 7 (e) by the word “sale” itself, is difficult to understand.
The Court further says that the provisions of §§ 4 (c)1 and 7 (b)2 present the same feature. In § 4 (c), the word “service” again appears as part of an omnibus definition which refers to a number of antecedents. Even assuming, as the Court does, that the only antecedent is “transportation or sale,” there is no reason to suppose that *165“service” was meant to be taken as the equivalent of “sale” as well as of “transportation,” or that it limits either. Section 7 (b) refers only to the abandonment of services “rendered by means of” jurisdictional facilities. There is not the slightest hint in the section that sales are considered to be such services.
Finally,- the Court points to the requirement of § 7 (e), ante, p. 148, that the applicant for a certificate be willing and able “to do the acts and perform the service proposed.” From this it infers that all the matters for which §7 (c), ante, p. 149, requires a certificate “must be justified in terms of a 'service’ to which they relate.” I should have .thought it quite plain that an applicant is required to “perform the service proposed” only if a service is proposed. Perhaps it would have been more apt for Congress to have said “do the acts and/or perform the services proposed,” but I cannot understand how the clause as written can be read as meaning that whatever the applicant proposes must be both an act and a service.
I must conclude that there is nothing in the statute which makes “sale” the equivalent of “service.” On the contrary, the terms are always used disjunctively. A sale, as a jurisdictional ground distinct from either transportation or the maintenance of jurisdictional facilities (§ 1 (b) ante, p. 160) is a limited transaction. A certificate authorizing a sale authorizes no more and, in my view, must be regarded as expiring when the underlying sale terminates, except in a situation where the Commission has properly conditioned issuance on continuance of the certificate for a longer period. See post, p. 167. It is suggested that the Commission has consistently held that the obligation to provide service persists even after a particular contract terminates. See United Gas Pipe Line Co., 3 F. P. C. 3; Cabot Gas Corp., id., 357; Godfrey L. Cabot, Inc., id., 582; Panhandle Eastern Pipe Line Co., 11 F. P. C. 167, 172. All those cases, however, involved pipeline com*166panies which were in fact providing a continuing service and which had facilities subject to the jurisdiction of the Commission regardless of the duration of a particular contract. They serve as no authority for the present quite different situation where an independent producer is subject to the Commission’s jurisdiction only by virtue of his sales.
II.
The Court asserts that a construction of the statute contrary to the one it reaches will result in intolerable consequences, primarily in two respects. First, it says, producers and pipelines would be able to abandon their undertakings at the end of the contract term without a showing that the public convenience and necessity justify such abandonment, thus defeating the policy of § 7 (b) of the Act, and giving the industry a lever to avert regulation of any kind. Second, it concludes, producers would be able, at the expiration of their contracts, to file a higher price as an initial rate under a new certificate. This would force the Commission, it is said, to test the reasonableness of the rate under § 5 (a), ante, p. 144, where the Commission has the burden of proof and where experience has shown the procedure to be subject to great delays, and would avoid the rate-change procedures of § 4 (e), ante, p. 145, where the producer has the burden of proof and the effectiveness of the rate can be suspended pending investigation.
As to abandonment, the Court’s view again rests on the erroneous notion that the Commission is charged with assuring continuity of “service” on the part of independent producers. However, § 7 (b), by its own terms, prohibits abandonment of only two things: jurisdictional facilities, and any service “rendered by means of” such facilities. The Court does not suggest that petitioners have any jurisdictional facilities. And there can be no *167apprehension about the pipelines, since they clearly provide a service by means of jurisdictional facilities and are certificated for an unlimited duration.
There is a more basic reason, however, why the evils which the Court imagines- do not exist. The Commission is required to issue a certificate only if the applicant’s proposal is required by the public convenience and necessity. The vast majority of sales are, of economic necessity, bona fide transactions of substantial duration (see United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U. S. 332, at 344) and will, of course, be approved in ordinary course. But surely, if a proposal contains such disingenuous provisions as the Court suggests, its certification would not be in the public interest. The Court’s fear that denial of the certificate under such circumstances would be overturned on review is the sheerest speculation, especially in an area where the Commission is entrusted with such wide discretion.
Furthermore, the Commission can tender a perpetual certificate under its § 7 (e) power to attach reasonable terms and conditions.3 But in such a case, it would have to bear the burden of showing that the public convenience and necessity require such a condition. What the Court in effect permits the Commission to do here is simply to attach the condition without such a showing. If, as the Commission stoutly maintains, a limited certificate would constitute a serious threat to the public interest, then surely it is not too much to ask it to show that fact before tendering a producer a certificate different from the one he has requested. And where the Commission has fairly made such a showing, I cannot believe, with all deference *168to the Court’s contrary intimation, that there is the slightest danger that its action would nonetheless be overturned on the theory it was attempting to accomplish indirectly that which it cannot do directly. Such a view assumes that a court will be blind to the conditioning power expressly given the Commission by statute, and ignores the fact that there is a very real difference between tendering an unlimited certificate when the Commission has made no affirmative showing of public need for a perpetual duration and tendering one when it has made such a showing. In the last analysis, that additional burden is the only consequence which turns on the outcome of these cases.
I would hold that where, as in No. 335, an independent producer applies for authority simply to engage in a sale transaction specifically limited in duration, the Commission has no authority to tender an unlimited certificate without bearing the burden of showing that such a departure from the proposal is required by the public convenience and necessity.
III.
The question remains whether petitioner in No. 321 proposed a sale transaction which was limited in duration and . whether the Commission certificated no more than that sale. The term of the contract filed with the Commission was clearly limited to 10 years. Petitioner’s appli7 cation incorporated that contract by reference, and declared that “[t]his application is hereby made only for a certificate of public convenience and necessity authorizing the sale of natural gas in the circumstances above described.” The Commission ordered that a certificate be “hereby issued . . . authorizing the sale by Applicant of natural gas ... as more fully described in the application and exhibits in this proceeding. . . . The certificate . . . shall be effective only so long as Applicant *169continues the acts or operations hereby authorized in accordance with the provisions of the Natural Gas Act . . . .” I think the fair interpretation of all this is that what was authorized was the sale proposed, and that the certificate should therefore be taken as limited in duration to the term of the sale contract.
The Commission, however, contends that since, at the time petitioner’s certificate was issued, it had taken the position in Sunray Oil Corp., 14 F. P. C. 877, that it had no power to issue a certificate specifically limited in duration, this certificate must be taken as one unlimited in duration. That position, however, was later reversed on appeal, Sunray Mid-Continent Oil Co. v. Federal Power Comm’n, 239 F. 2d 97, and the Commission acquiesced therein. But the Commission was more fundamentally wrong in believing that a certificate authorizing a sale is unlimited unless specifically otherwise conditioned. Therefore, when it tendered to petitioner a certificate without any limiting language, its erroneous belief that it was issuing a perpetual certificate could not bind petitioner. The Commission was authorized to issue only a certificate limited to the duration of the sale unless a condition were expressly imposed to the contrary, and what it issued purported to be no more than that. Petitioner cannot be taken to have acquiesced in a certificate authorizing something other than it requested, where the certificate gave no notice of that fact, simply because the Commission may have believed its effect to be otherwise.
I fear this is another instance where the Court has taken impermissible liberties with statutory language in order to remedy what it considers an undesirable deficiency in the way Congress has written the statute. Cf. United States v. Republic Steel Corp., 362 U. S. 482, 493 (dissenting opinion).
I would reverse the judgments in both cases.

 “(o) Under such rules and regulations as the Commission may prescribe, every natural-gas company shall file with the Commission, within such time (not less than sixty days from June 21, 1938) and in such form as the Commission may designate, and shall keep open in convenient form and place for public inspection, schedules showing all rates and charges for any transportation or sale subject to the jurisdiction of the Commission, and the classifications, practices, and regulations affecting such rates and' charges, together with all contracts which in any manner affect or relate to such rates, charges, classifications, and services.”

 “(b) No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or necessity permit such abandonment.”

 “The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.”