Federal Power Commission v. Texaco, Inc

• Decision Date: 20 April 1964
• Docket Number: No. 386,386
• Citation: 377 U.S. 33,12 L.Ed.2d 112,84 S.Ct. 1105
• Parties: FEDERAL POWER COMMISSION, Petitioner, v. TEXACO, INC., et al
• Court: U.S. Supreme Court

377 U.S. 33

84 S.Ct. 1105

12 L.Ed.2d 112

FEDERAL POWER COMMISSION, Petitioner,

v TEXACO, INC., et al.

No. 386.

Argued March 25, 1964.

Decided April 20, 1964.

Rehearing Denied June 15, 1964.

See 84 S.Ct. 1881.

Howard E. Wahrenbrock, Washington, D.C., for petitioner.

Carroll L. Gilliam, Washington, D.C., and Alfred C. DeCrane, Jr., Houston, Tex., for respondents.

Mr. Justice DOUGLAS delivered the opinion of the Court.

The Federal Power Commission in its regulation of independent producers¹ of natural gas has required them to file their contracts as rate schedules. This was done by regulations which evolved as a result of a series of rule-making proceedings.² The pertinent regulations presently provide that only certain pricing provisions in the contracts of independent producers are 'permissible,'³ any other being 'inoperative and of no effect at law.' ⁴ The regulations go on to say that any contract executed on or after April 2, 1962, containing pricechanging provisions other than the 'permissible' ones, 'shall be rejected' so far as producer rates are concerned,⁵ that a producer's application for a certificate of public convenience and necessity under § 7 of the Natural Gas Act 'shall be rejected' if any contract submitted in support of it contains any of the forbidden provisions,⁶ and that, so far as pipeline certificates are concerned, any producer contract executed after that date which has that infirmity 'will be given no consideration in determining adequacy' of a pipeline company's gas supply.⁷

These regulations were adopted pursuant to the provisions of § 4 of the Administrative Procedure Act, 60 Stat. 238, 5 U.S.C. § 1003. General notice of the proposed rule making was published in the Federal Register as required by § 4(a) of that Act. The Commission also gave interested parties a 'hearing' under § 4(b).⁸ No oral argument was had but an opportunity was afforded for all interested parties to submit their views in writing; and the two respondents in this case—Texaco and Pan American—along with others, did so.

Later, each respondent submitted an application for a certificate of public convenience and necessity under § 7 of the Natural Gas Act, to supply natural gas to a pipeline company. Section 7 provides, with exceptions not presently material, that the Commission 'shall set' such an application 'for hearing.' Since, however, the applications disclosed price clauses that are not 'permissible' under the regulations,⁹ the Commission without a hearing rejected the applications. 28 F.P.C. 551; 29 F.P.C. 378. Petitions for review were filed with the Court of Appeals, which set aside the orders of the Commission. 10 Cir., 317 F.2d 796. It held that while the regulations are valid as a statement of Commission policy, they cannot be used to deprive an applicant of the statutory hearing granted those who seek certificates of public convenience and necessity. The two cases are here in one petition for certiorari which we granted because of an apparent conflict between that decision and Superior Oil Co. v. Federal Power Comm'n, 9 Cir., 322 F.2d 601, decided by the Court of Appeals for the Ninth Circuit. 375 U.S. 902, 84 S.Ct. 193, 11 L.Ed.2d 142.

I.

A preliminary question, which concerns Texaco Inc., alone, is whether venue to review these orders of the Commission was properly in the Tenth Circuit. The governing provision is § 19(b) of the Natural Gas Act which provides:

'Any party to a proceeding under this Act aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the court of appeals of the United States for any circuit wherein the natural-gas company to which the order relates is located or has its principal place of business, or in the United States court of appeals for the District of Columbia * * *.'

The term 'is located' would have an ambivalent meaning if venue lay only in 'any circuit' where the natural gas company 'is located.' But in the context of § 19(b) 'any circuit' covers either the place where the company 'is located' or where it 'has its principal place of business.' Hence the main argument of Texaco derives from the fact that 'is located' was substituted for 'resides' in an early draft of the bill¹⁰ which later emerged as the Federal Power Act, from which § 19(b) of the Natural Gas Act is derived. The Court of Appeals found that change decisive; but we can only conjecture as to why it was made, as no explanation appears. The bill in which 'resides' was used gave review to 'any person aggrieved' and the bill substituting 'is located' for 'resides' substituted 'licensee or public utility' for 'person aggrieved.' Since the latter language was changed from the personal to the impersonal it may be, as the Commission says, that the Congress was trying to use common legal parlance that a corporation 'can have its legal home only at the place where it is located by or under the authority of its charter,' as stated in Ex parte Schollenberger, 96 U.S. 369, 377, 24 L.Ed. 853. And see Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 169, 60 S.Ct. 153, 84 L.Ed. 167. However that may be, we think that 'is located' means more than having physical presence or existence in a place, since the alternate venue referred to in § 19(b) is 'principal place of business.' The Court of Appeals recognized the overlap between the two clauses inherent in its construction but resolved its doubts in favor of Tenth Circuit venue because the gas sold by Texaco under the contested contracts was produced in that circuit and the performance of the contract took place there.

The Act with which we deal was enacted August 26, 1935. At that time and down to the 1948 amendment of § 1391 of the Judicial Code, 28 U.S.C. § 1391(c), the only residence of a corporation for purposes of federal venue was the State and district in which it had been in- corporated. See 9 Fletcher, Cyclopedia Corporations (1931), § 4385. That theme runs through the cases. See, e.g., Shaw v. Quincy Mining Co., 145 U.S. 444, 449—450, 12 S.Ct. 935, 36 L.Ed. 768. We conclude that, although 'located' sometimes is used as indicating a place of business (Mercantile Nat. Bank v. Langdeau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523), in the setting of this Act 'is located' and 'resides' are equated and that 'is located' refers in the case of Texaco to its State of incorporation. There is symmetry in that construction as the choice, so far as circuits are concerned, is then left between that State, the 'principal place of business' (with no penumbra of other places of business, as here), or the District of Columbia where the Commission sits.

Texaco is a Delaware corporation and there is no claim that its principal place of business is within the Tenth Circuit. The Court of Appeals therefore erred in failing to dismiss its petition for lack of venue. There is, however, another respondent, Pan American, whose principal place of business is within the Tenth Circuit. We therefore proceed to the merits of its application.

II.

The main issue in the case is whether the 'hearing' granted under § 4(b) of the Administrative Procedure Act is adequate, so far as the price clauses are concerned, for purposes of § 7 of the Natural Gas Act. We think the Court of Appeals, erred that the present case is governed by the principle of United States v. Storer Broadcasting Co., 351 U.S. 192, 76 S.Ct. 763, 100 L.Ed. 1081, and that the statutory requirement for a hearing under § 7 does not preclude the Commission from particularizing statutory standards through the rulemaking process and barring at the threshold those who neither measure up to them nor show reasons why in the public interest the rule should be waived.

In Storer the Federal Communications Commission, pursuant to its general rulemaking authority, limited permissible multi le ownership for radio and television stations. Storer, which had seven radio stations and five television stations, was under that rule automatically disqualified for further licensing. To surmount that barrier it argued that the Act required a license to issue where the public interest would be served and that before an application could be benied, a hearing must be held. We said:

'We read the Act and Regulations as providing a 'full hearing' for applicants who have reached the existing limit of stations, upon their presentation of applications conforming to Rules 1.361(c) and 1.702, that set out adequate reasons why the Rules should be waived or amended. The Act, considered as a whole, requires no more. We agree with the contention of the Commission that a full hearing, such as is required by § 309(b) * * * would not be necessary on all such applications. As the Commission has promulgated its Rules after extensive administrative hearings, it is necessary for the accompanying papers to set forth reasons, sufficient if true, to justify a change or waiver of the Rules. We do not think Congress intended the Commission to waste time on applications that do not state a valid basis for a hearing. If any applicant is aggrieved by a refusal, the way for review is open.' 351 U.S., at 205, 76 S.Ct. at 771, 100 L.Ed. 1081.

In the present case, as in Storer, there is a procedure provided in the regulations whereby an applicant can ask for a waiver of the rule complained of.¹¹ Facts might con- ceivably be alleged sufficient on their face to provide a basis for waiver of the price-clause rules and for a hearing on the matter. Cf. Atlantic Refining Co., 28 F.P.C. 469; 29 F.P.C. 384. But no such attempt was made here by Pan American, the only respondent to which the present point has any immediate applicability.

The rule-making authority here, as in Storer, is ample to provide the conditions for applications under § 4 or § 7. Section 16 of the Natural Gas Act gives the Commission power to prescribe such regulations 'as it may find necessary or appropriate to carry out the provisions of this Act.' We deal here...